A HIC6 contract or home improvement contract is a contract prepared by the Master Builders Association. It is used to govern the relationship between homeowners and builders in relation to projects over $10,000.
A HIC6 master builders contract can only be used for residential home improvements. This would include renovations or extensions where there is no architect supervision needed.
If you are a homeowner who is engaged with a builder for a renovation or an extension on your house, you will probably be asked to sign a HIC6 contract.
What does a HIC6 contract govern
A HIC6 contract covers a range of areas that are specific to renovations and home improvement projects. However there are a few key clauses that you need to keep in mind as a homeowner which could affect the cost, quality and duration of your project.
- Extension of time clauses
- Cost escalation clauses
- Warranty and specification clauses
Cost escalation clauses
Cost escalation clauses work in the favour of the builder, they aim to account for unexpected costs which occur during the construction process that exceed the previous estimated value. Essentially, they allow a builder to add on additional costs on top of the original quote if they arise during the course of business.
The Appendix of your HIC6 contract should allow you to recognise where costs may be increased during your project. Keep in mind, typical points of cost escalation for a building renovation project may include:
- Interest on overdue payments
- Extra costs associated with excavation and footings
- Liquidated damages, if your actions cause the project to delay, you may need to pay the builder compensation if it causes them a detriment
Cost escalation clauses can cause changes to your original budget. As a home or land owner you must keep this in mind before engaging in a renovation or extension with a builder.
Time extension clauses
Builders under the clauses in a HIC6 contract are entitled to an extension of time period for completion of works. There are a number of factors that would entitle a builder to an extension of time period under the HIC6, these would typically include:
- Weather delays (rainy days/thunder or extreme heat)
- Delays in the granting of permits or council approval
- materials not being available
- variations made to the project at the request of the owner
Building projects are typically subject to time extensions, it is important to understand this before you go any further with a builder. In the above circumstances and in reasonable circumstances it is important to grant your builder extra time when needed. This will lead to your project being completed in a safe and professional manner.
Warranty and specifications clauses
Once again the Appendix of your HIC6 contract will set out the agreed specifications for your extension or renovation. The builder will rely on these specifications and if they are provided by you they must be accurate. This is because the builder can avoid liability for design faults that arise due to faulty planning.
Fortunately under a HIC6 contract builders will be liable to fix any defects or faults that they have caused in relation to poor workmanship. This means that you are protected from incurring any costs that are associated with rectifying defective work. It is important to raise any issues with defective work immediately with your builder so that they can be rectified.
To Sum Up
- The Appendix of your HIC6 contract will sum up the costs, specifications and duration of your project
- Cost escalation clauses are covered under a HIC6 contract and must be understood before proceeding with a project
- Builders are entitled to time escalation clauses under a HIC6
- It is important to bring up any issues with defects immediately to a builder
If you need any help reviewing a HIC6 contract or have any construction related issues, get in touch with our construction lawyers or call 1300 337 997.
Phil is a director at OpenLegal. He has over 16 years experience working in private practice and in-house counsel in Sydney and London, giving him expertise in employment law, IP, finance, leases, dispute resolution, insurance and contracts.
Phillip is completing his law degree at the University of Technology (Sydney). He worked previously with Lawpath, and Justice Action. His interests are with construction and technology law.
