We are often asked to review residential building contracts just before the building work is scheduled to commence and after the design has been completed and building consent issued.
Sometimes the builder has undertaken that previous design but the building contract relates only to the builder’s responsibility for the building work (not the prior design).
When we enquire about the terms of that design engagement, we often find there is no written contract with the builder for that design work, or where there is, that it typically lacks important provisions.
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Registered Master Builders Residential Building Contract – is it a “fixed price” contract?
There are cost certainty benefits in engaging a builder under a lump sum / fixed price building contract. It can be difficult to know the final cost of residential building work and a fixed price contract generally means the builder takes on the risk of increased costs. Contrast this to a charge up contract which moves that risk from the builder to you.
The Registered Master Builders have their own form of building contract and the current version, the RCB1 – 2018 (RCB1) allows for either a lump sum/fixed price or a charge up price. But is the RCB1 lump sum a true fixed price to the extent that the stated lump sum amount is the only amount you will be required to pay?
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