Signing a building contract is the moment your new home stops being a plan and becomes a legal commitment. In Victoria, a well-written domestic building contract protects both you and your builder, and knowing what to look for before you sign can save enormous stress on the Mornington Peninsula.
Why the contract matters so much in Victoria
Domestic building work in Victoria is governed by the Domestic Building Contracts Act 1995 and overseen by the Victorian Building Authority (VBA). For any work valued above the relevant threshold, a written major domestic building contract is a legal requirement, not an optional extra.
The contract is where your price, your inclusions, your timeframe, and your rights all live. If something is not written down, it is very hard to enforce later, so treat the document as your single source of truth rather than relying on friendly conversations during the sales process.
Check the builder before you check the contract
A good contract starts with a properly registered builder. In Victoria, the person or company carrying out domestic building work above the threshold must hold the appropriate registration as a building practitioner, and you can verify this directly on the VBA register.
- Confirm the builder’s registration category and that it is current.
- Make sure the entity named on the contract matches the registered practitioner.
- Ask to see recent, comparable work so you understand their standard of finish.
Reviewing a builder’s completed projects and reading how they describe themselves on their about page will tell you a lot about whether their experience genuinely suits a coastal Peninsula build.
Domestic building insurance is non-negotiable
For most residential projects above the threshold, your builder must take out domestic building insurance (often called builder’s warranty insurance) before asking you for a deposit or starting work. This cover protects you if the builder dies, becomes insolvent, or disappears before the job is finished.
A trustworthy builder will provide the certificate of insurance for your specific project, in your name, without being chased. If a builder is reluctant to supply it, treat that as a serious warning sign.
Deposits and progress payments
Victorian law caps the deposit a builder can request. As a general guide, the maximum deposit is 5 per cent for contracts of $20,000 or more, and 10 per cent for smaller contracts, so be cautious of anyone asking for a large upfront lump sum.
After that, payments should be tied to genuine construction stages such as base, frame, lock-up, and fixing. Each progress claim ought to reflect work actually completed, so you are never paying substantially ahead of what has been built on your block.
Inclusions, allowances, and the fine print
Vague inclusions are one of the biggest causes of budget blowouts. A strong contract spells out exactly what you are getting, from the brand of tapware to the type of insulation, rather than leaving items open to interpretation.
- Provisional sums and prime cost items: these are estimates for things not yet finalised, such as tiles or appliances. Ask how realistic the allowances are, because low figures inflate later.
- Site costs: sloping blocks around Arthurs Seat, McCrae and Mount Martha often need extra excavation, retaining or engineered footings. Confirm whether these are fixed or estimated.
- Energy and compliance: your home must meet the National Construction Code and, for new dwellings, a 7-star NatHERS energy rating. The specified glazing, insulation and orientation should reflect that.
- Bushfire and coastal factors: a Bushfire Attack Level (BAL) assessment may dictate materials, and salt-laden coastal winds near Port Phillip Bay call for corrosion-resistant fixings and finishes.
Timeframes, variations, and delays
Your contract should state a start date and a build period, along with the circumstances that legitimately extend it, such as weather or client-requested changes. Reasonable extension-of-time clauses are normal; open-ended ones are not.
Variations deserve special attention. Every change to the scope should be documented and priced in writing and signed by both parties before the work proceeds, so surprises never appear on a later invoice. A clear, staged approach like the one set out in our building process makes variations far easier to manage.
Permits, planning, and who is responsible
On the Mornington Peninsula, many blocks sit within overlays for environmental significance, vegetation, bushfire or coastal protection. Your contract should make clear who is obtaining the building permit and any planning permit required by Mornington Peninsula Shire Council, and how the cost of conditions is handled.
Areas such as Rosebud, Safety Beach, Rye and Dromana each carry their own site quirks, so a builder who understands local council expectations will draft a far more accurate contract from the outset.
Warranties and defects
Victorian building work carries statutory warranties that cannot be signed away, including that the work will be carried out with reasonable care and skill and be fit for purpose. A good contract also sets out a defects liability period and a clear method for you to raise and resolve issues after handover.
Before you sign
Read the entire document, including the general conditions, and never feel rushed. It is completely reasonable to have a solicitor or a building consultant review the contract, and any reputable builder will welcome that scrutiny rather than resist it.
If you are weighing up a new home in Dromana, DARC Building Group is a local Dromana builder who can walk you through a clear, compliant contract and explain exactly what each clause means for your project. Get in touch to start the conversation with confidence.
Frequently Asked Questions
Is a written building contract legally required in Victoria?
Yes. For domestic building work above the value threshold set under the Domestic Building Contracts Act 1995, a written major domestic building contract is required. It must set out the price, the work to be done, and the terms, and both you and your registered builder should sign it before any work begins.
How much deposit can a builder ask for in Victoria?
Victorian law caps deposits for domestic building contracts. As a general guide, the maximum is 5 per cent for contracts valued at $20,000 or more and 10 per cent for smaller contracts. Be wary of any builder requesting a much larger upfront payment before work starts.
What is domestic building insurance and do I need it?
Domestic building insurance, sometimes called builder’s warranty insurance, protects you if your builder dies, becomes insolvent, or fails to complete the work. For most projects above the threshold your builder must arrange it and provide a certificate in your name before taking a deposit or starting construction.
What should I check for a sloping block in Dromana?
Sloping and coastal blocks around Dromana, McCrae and Mount Martha often need extra site works such as excavation, retaining and engineered footings. Make sure your contract clearly states whether these site costs are fixed or estimated, and check that any bushfire (BAL) or coastal wind requirements are reflected in the specified materials.