Builder charging more than the quote: what the law says

When an increase can be paid, by state

What each state's law says about paying for an agreed variation, and where it leaves the timing to your contract.

Where the law limits what the builder can charge

Victoria

A builder can't recover any money for a variation they asked for unless they complied with section 37 and can show it was made necessary by circumstances they couldn't reasonably have foreseen when the contract was signed, and can't recover any money for a variation the owner asked for unless they complied with section 38 — in either case unless VCAT is satisfied there are exceptional circumstances or the builder would suffer significant or exceptional hardship, and that it would not be unfair to the owner. Where the money can be recovered, it is the cost of the variation plus a reasonable profit (sections 37(3), 37(4), 38(6) and 38(7)).

Queensland

Starting the varied work before the owner agrees in writing is an offence: 20 penalty units (Schedule 1B, section 40(5)).

A change, or an allowance?

Not every increase is a variation. If the extra is for a prime cost item or a provisional sum — an allowance in the contract for something not yet chosen or priced — the price moves with the actual cost under the contract's clause on allowances.

In Victoria the builder must give you a copy of any invoice or receipt behind a prime cost item or provisional sum as soon as practicable after receiving it (section 23), and it is an offence to put an allowance in the contract below the reasonable cost (section 21). Western Australia has the same offence for an allowance understated below the least it could reasonably cost (section 12).

What to do

• Ask the builder for the variation in writing: what changes, the price line by line with GST, and the new contract price.
• Check whether the extra is a change to the work or an allowance in the contract.
• If you don't agree with it, don't sign it, and tell the builder in writing why.
• If the change was only agreed on site, write it down yourself and send it to the builder to sign: ask your builder to put it in writing.

Can the builder charge before doing the work?

New South Wales

The variation clause doesn't deal with when a variation is paid — your contract's payment clause does. What the Act does require is that the variation is in writing and signed by or on behalf of both of you (Schedule 2, Part 1, clause 1(2)), so get the signed, priced variation before you pay anything extra.

Victoria

The order the Act sets is: written notice, your signed consent, then the builder can give effect to it (section 37(2)). And a builder who asks for a variation can't recover any money for it unless they followed section 37 and can show the variation was made necessary by circumstances they couldn't reasonably have foreseen when the contract was signed — or VCAT allows it in exceptional circumstances (section 37(3)). For when an agreed variation is paid, look at your contract's payment clause.

Queensland

No. Section 41(3): an increase in the contract price from a variation can't be required to be paid before the varied work starts. The variation document itself has to say when the increase is paid (section 41(2)).

Western Australia

For when a variation is paid, look at your contract's payment clause. What section 7 requires is that the variation is written, costed, dated and signed by both of you, with your copy before the work starts — so get that before you pay anything extra.

South Australia

The Act treats the variation as a contract of its own (section 3) that has to be in writing and signed by both parties (section 28). For when it's paid, look at your contract's payment terms — and don't pay for extra work that isn't in a signed variation.

Tasmania

The variation document itself has to say how progress payments are affected (section 18(2)) — so the payment timing should be on the page you sign. Where it adds work, the document has to be in place before that work starts.

Australian Capital Territory

The Building Act 2004 has no statutory rule for variations, so your building contract's variation clause governs. Get it in writing, priced, and signed by both of you before the work — which is what every state that does legislate asks for.

Northern Territory

The Building Act 1993 has no statutory variation rule either; the contract's variation clause governs. Same advice: in writing, priced, signed by both, before the work.