What to Look For in a Contract With a Builder for Your Dream Home

What to Look For in a Contract With a Builder for Your Dream Home

Building your dream home requires a big financial and emotional investment. So, whether you’re planning new home builds or conducting home renovations like we are currently, every step of the process needs careful consideration. One of the most important steps is making sure the contract with your builder is clear, fair, and designed to protect. 

A good contract isn’t just a formality—it lays the foundation for your project and helps prevent unexpected costs, delays, and disagreements. So, understanding the key parts of a contract can save you from future problems. This guide will explain what to look for so you can sign with confidence.

Builder’s Credentials

Before signing anything, make sure your builder is licensed, insured, and part of a respected organisation. In New Zealand, only licensed building practitioners (LBPs) can conduct certain types of construction work. Moreover, certified builders often follow higher standards and offer extra warranties.

When searching for builders, Dunedin and other parts of Otago offer plenty of options. To make sure you choose right, check their credentials, ask for references, look at their previous projects, and, if possible, visit homes they’ve built. A trustworthy builder should be happy to share their past work and connect you with satisfied clients.

Clearly Defined Scope of Work

One of the biggest issues homeowners face is confusion over what is included in the contract. For example, if it just says “kitchen renovation,” you might expect a luxury kitchen with marble benchtops and custom cabinets, while the builder may only plan to repaint and install a new sink.

To avoid misunderstandings, your contract should list exactly what work will be done. It should include details about materials, designs, demolition, and even landscaping. Attach all architectural plans, design drawings, and product lists to make sure everyone is on the same page.

Pricing and Payment Terms

Building a home can be expensive, and costs can sometimes go over budget. A good contract should clearly explain how pricing works—whether it’s a fixed-price contract (the total cost is agreed upfront) or a cost-plus contract (you pay for materials and labour with an extra builder’s fee).

If it’s not a fixed price, the contract should explain how extra costs will be calculated and approved. Some builders use cost estimates, but these should be realistic. Your contract should also include payment details, such as the deposit amount, when payments are due, and the final payment terms.

Timeline, Milestones, and Delay Clauses

Your contract should include a realistic timeline, with start and finish dates, as well as key milestones and delay clauses in the contract. For example, if your builder promises to finish in 9 months but takes 14 months without a good reason, the contract should state the consequences. A good contract will also explain what happens if delays are caused by things like bad weather or supply issues. This helps make sure your project stays on track and your builder sticks to the plan.

Policies for Changes and Amendments

Even with careful planning, you might want to make changes during construction. Some homeowners assume small changes won’t cost much, but even “minor” adjustments can end up costing a lot. A contract with a clear process for making changes will help you avoid unpleasant surprises.

For example, you might decide to upgrade the flooring or change the layout of a room. Your contract should explain how such changes are handled, how much they will cost, and how they will affect the schedule.

Warranties and Guarantees

Many builders in New Zealand offer a 10-year Master Build Guarantee, but this isn’t always automatic. So, review your contract thoroughly. It should clearly explain what warranties apply, how to report issues, and how long the builder has to fix them. For example, if your roof starts leaking six months after you move in, your contract should confirm that the builder is responsible for repairs, including the cost of labour and materials.

Dispute Resolution Process

Even with a solid contract, problems can still happen. That’s why it’s important to have a clear process for resolving disputes, whether through mediation, arbitration, or legal proceedings. For instance, if you and the builder disagree on the quality of the materials used, a neutral expert could be called to inspect the work and give an opinion. A fair dispute resolution process can save time, money, and stress.

Termination Clauses

Sometimes things just don’t work out. There could be extreme delays, major budget problems, or a failure to meet the agreed standards. A termination clause comes in handy in this situation, protecting both you and the builder if the project needs to be cancelled. This section of the contract should explain under what conditions either party can end the agreement and what happens next. If a builder walks off the job before finishing, you need to know if you can withhold payment or get some of your money back. 

Legal Considerations

Many homeowners rush into signing a builder’s contract because they’re eager to start building. However, having an extra pair of eyes in reviewing your contract can save you months of stress and unexpected costs later. Before signing, have a lawyer review the contract. They may spot potential issues and suggest changes that protect you.

 

A well-written contract sets clear expectations, prevents financial surprises, and makes sure you and your builder are on the same page. By taking the time to review all the details, you can confidently move forward with your grand designs and bring your vision to life. Making sure your contract contains all the right pieces of information will save you time, money, and stress later—so you can focus on creating the home of your dreams.