Understanding HIA Contracts
Understanding HIA Contracts
The HIA contract is used by most project builders — but very few clients actually understand what they’re signing. From hidden allowances and variation traps to dispute clauses and missing protections, this guide breaks down the parts that matter most. If you want clarity before contract, read this first.
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“Whatever it is, the way you tell your story online can make all the difference.”
What Is an HIA Contract?
The HIA (Housing Industry Association) contract is the standard agreement used by most project and volume builders in Australia. If you’re building a new home, this is likely what you’ll be asked to sign.
It is designed to protect both parties, but make no mistake — it is written by the building industry, for the building industry. That means the default terms lean in the builder’s favour unless carefully reviewed and negotiated.
Inside, you’ll find the full legal framework for your build:
- What’s being delivered
- How long it will take
- What it costs and how you’ll pay
- What happens if something goes wrong
- How defects and disputes are handled
Most of it is locked behind technical clauses and legal wording that the average client never reads or fully understands.
Clause references you’ll want to be aware of early include:
- Clause 3 — Scope of Work
- Clause 12 — Plans and Specifications
- Clause 16 — Legal ownership of drawings
- Clause 33 — Allowances and adjustments
- Clause 40 — Delays and liquidated damages
- Schedule 1 & 5 — Materials, fixtures, appliances, and special conditions
Guardian Tip: This isn’t just a formality. It’s the rule book. Every right you have, every risk you carry, every dollar you’re agreeing to — it all lives here. If you don’t understand it, bring someone in who does. Do not sign on blind faith.
“Whatever it is, the way you tell your story online can make all the difference.”
What’s in the Contract Is Final — No Exceptions
Once you sign the contract, the builder is only required to deliver what is written — not what was discussed, assumed, or implied.
If it is not clearly included in your plans, specifications, inclusions list, or special conditions, it will not be built. This includes:
- Display home features
- Verbal promises or conversations
- Email confirmations
- Sales rep suggestions or allowances to sort things out later
The builder’s legal responsibility is locked to what is written in:
- Clause 1 — Agreement and interpretation
- Clause 3 — Scope of work
- Clause 12 — Construction to plans and specs
- Clause 16 — Ownership of drawings
- Schedule 1 & 5 — Fixtures, fittings, materials, selections
Many clients assume builders will deliver what was discussed, shown in a display, or mentioned in passing. But that is not how contracts work. Builders will follow the paperwork — exactly as signed.
This is why so many people walk through their home during construction and say things like:
- “I thought we were getting higher ceilings”
- “This window feels smaller than the display”
- “We expected a different finish here”
If it is not on your documents, it will not be included. At best, you’ll pay for a variation. At worst, it is too late.
Guardian Tip: Triple-check your drawings, inclusion lists, and every written schedule. Confirm ceiling heights, window sizes, floor finishes, appliance specs, and layout changes. Do not assume anything. If it matters — get it written down.
“Whatever it is, the way you tell your story online can make all the difference.”
Prime Cost and Provisional Sums = Budget Killers
Two of the most misunderstood and underestimated contract terms are Prime Cost (PC) items and Provisional Sums (PS). These are the hidden risks that often lead to surprise blowouts during construction.
Prime Cost Items refer to items you haven’t selected yet — things like tapware, tiles, or appliances. The builder puts in a placeholder budget, often low. If you select something more expensive, you pay the full difference, plus their margin.
Provisional Sums cover work that can’t be quoted accurately at contract stage. This includes excavation, rock removal, site cuts, stormwater connections, and retaining walls. Again, if the work costs more than allowed for, you pay — with margin on top.
These allowances are defined in Clause 33 and listed in Schedule 2 of your contract.
In both cases:
- You carry the risk
- You pay the overage
- The builder adds a margin — often 20 to 40 percent
These extras can add up fast. It’s not unusual for PC and PS blowouts to increase your final cost by $20,000 to $40,000 or more — and most clients don’t realise until construction is underway.
Guardian Tip: Ask for a complete list of PC and PS items before you sign. Ask what margin is applied. Ask if any of them can be converted to fixed prices. If the builder avoids the conversation or says “that’s just standard,” treat it as a warning. These are not small variables — they are the most common reason your build will cost more than expected.
“Whatever it is, the way you tell your story online can make all the difference.”
Variations: Easy to Trigger, Hard to Escape
A variation is any change to your contract after it has been signed. This could be something you ask for — or something triggered by council, engineering, or compliance requirements.
Variations are covered under Clauses 12, 21, 22, 23, and 24 in the HIA contract. Even if the variation is mandatory, like a building code update, you’ll still be the one who pays for it.
You will be asked to:
- Approve the variation in writing
- Accept the additional cost
- Show that you can fund it in some cases
The cost is set by the builder. It often includes a margin — and you have little power to dispute the pricing once construction is underway.
If the value of variations increases your contract by more than 15 percent, you are allowed to terminate the contract. But you will still owe money for any work completed to date.
Guardian Tip: Ask your builder what types of variations are common in your build. Ask what margin they apply to variations. Understand that this is not just about things you change — it is often driven by things you can’t control. Get clear on what could change, how much control you will have, and how quickly it will escalate.
“Whatever it is, the way you tell your story online can make all the difference.”
Delay Costs: You Might Owe the Builder, But They May Owe You Too
Delays happen in every build — weather, trades, supplier issues, approvals. What matters is who pays when things run late.
The HIA contract gives builders the right to claim extra time for a range of reasons under Clause 34. They can also charge you delay damages if you hold things up — like not paying on time, missing a deadline for selections, or blocking access to the site.
But what if the builder is the one who causes the delay?
You are only entitled to compensation if your contract includes a clearly written liquidated damages clause — usually found in Clause 40 and listed in Schedule 1, item 12.
This clause must state a weekly amount (e.g. $250 to $500 per week) that you will receive if the builder finishes late. If that section is left blank, you get nothing — no matter how long the delay.
Guardian Tip: Builders do not add delay penalties unless you ask. Check if the liquidated damages clause is filled in. If it’s not, request a fair weekly amount. It gives you some leverage and offsets costs like rent or storage if things run behind. It is one of the only tools you have to hold your builder accountable to a timeline.
“Whatever it is, the way you tell your story online can make all the difference.”
Progress Payments: Read the Schedule Closely
Progress payments are how your builder gets paid during construction. They are split into stages — Base, Frame, Lock-up, Fixing, and Completion — each tied to a percentage of the total contract price.
These payments are controlled by Clauses 29 and 30 in the contract and outlined in Schedule 3. When a stage is finished, the builder issues an invoice. You usually have seven days to pay.
The challenge is not every builder defines stage completion the same way. Some may issue a claim before the work is fully finished, or before you’ve had a chance to inspect it.
It’s also common for builders to front-load payments. That means more of the money is collected in the early stages, leaving you with little leverage if problems arise later in the build.
If you delay payment, most contracts allow the builder to charge interest — often fifteen percent or more — even if you’re holding off for a valid reason.
Guardian Tip: Ask your builder what is included in each stage. Get clarity on what needs to be complete before they can claim payment. Review the percentages — if they feel heavy in the early stages, speak up. And make sure you understand how fast the clock runs once that invoice hits your inbox.
“Whatever it is, the way you tell your story online can make all the difference.”
Cooling Off Rights Exist But Only Briefly
In Victoria, you have a legal right to cancel your contract within five business days of receiving the signed agreement. This is known as the cooling off period. It is your last opportunity to walk away without a major financial penalty.
This right is provided under Section 31(n) of the Domestic Building Contracts Act, and supported by Clauses 19.4 and 21.4 of the HIA contract.
After those five business days, your builder can charge a termination fee — usually up to twenty percent of the contract value — to cover overheads and profit loss. It does not matter if the build has not started. If the contract is signed, it is enforceable.
Most clients don’t realise how fast five business days can fly. By the time you're juggling colour selections, finance finalisation, and builder follow-ups, that window can close without warning.
Guardian Tip: As soon as you receive the signed contract, stop everything else and focus on one thing — reading it. Use those five days to ask hard questions, check the fine print, and get advice if something doesn’t feel right. After that, you are locked in and the consequences are real.
“Whatever it is, the way you tell your story online can make all the difference.”
Special Conditions Override Everything Else
Special Conditions are the part of your contract where builders insert their own terms. They are usually typed into Schedule 4 and enforced through Clause 1.
These clauses override the standard HIA contract. If there’s a conflict between what the template says and what’s been added here, the Special Condition wins.
Many clients skip this section entirely because it’s long, legalistic, and buried near the end of the contract. But this is where a lot of your protection can disappear.
Common examples include:
- Locking out design changes after signing
- Shifting responsibility for temporary fencing, water, or power to the owner
- Prohibiting independent site access unless pre-approved
- Limiting the builder’s liability for third-party delays
Builders use Special Conditions to protect their process. That’s fair — but it also means you need to read them closely to understand what risks are being passed to you.
Guardian Tip: Read every word in Schedule 4. Ask your builder what each clause means in plain English. If something seems one-sided or vague, ask for clarification in writing. These conditions often carry the biggest consequences and the smallest print.
“Whatever it is, the way you tell your story online can make all the difference.”
Defects and Maintenance Periods Are Shorter Than You Think
After handover, you enter what’s called the Defects Liability Period. During this time, your builder is responsible for fixing non-urgent defects that you report.
In most HIA contracts, this period is just three months. That timeline is outlined under Clauses 36 to 39, and may be altered or reinforced by a builder’s own insertions under Special Condition 2.
Many clients assume they have twelve months or longer — but that’s a common misconception. After the three-month mark, responsibility shifts. You may be required to prove that any issues are genuine defects, not wear or maintenance.
This is also the time your final payment is due. If you do not submit a defects list, the builder can interpret that as approval — even if problems appear a week later.
Some builders will extend this period by agreement. Others will narrow your rights with custom clauses that restrict how and when you can report issues.
Guardian Tip: Before making final payment, do a full walk-through with fresh eyes. Test doors, taps, appliances, switches, and cabinetry. Write down anything that feels off, no matter how small. Once those three months pass, it becomes a much harder fight.
“Whatever it is, the way you tell your story online can make all the difference.”
Defects and Maintenance Periods Are Shorter Than You Think
After handover, you enter what’s called the Defects Liability Period. During this time, your builder is responsible for fixing non-urgent defects that you report.
In most HIA contracts, this period is just three months. That timeline is outlined under Clauses 36 to 39, and may be altered or reinforced by a builder’s own insertions under Special Condition 2.
Many clients assume they have twelve months or longer — but that’s a common misconception. After the three-month mark, responsibility shifts. You may be required to prove that any issues are genuine defects, not wear or maintenance.
This is also the time your final payment is due. If you do not submit a defects list, the builder can interpret that as approval — even if problems appear a week later.
Some builders will extend this period by agreement. Others will narrow your rights with custom clauses that restrict how and when you can report issues.
Guardian Tip: Before making final payment, do a full walk-through with fresh eyes. Test doors, taps, appliances, switches, and cabinetry. Write down anything that feels off, no matter how small. Once those three months pass, it becomes a much harder fight.
“Whatever it is, the way you tell your story online can make all the difference.”
Builders Often Spend More Than You Have by Contract Time
By the time you reach contract signing, the builder has already spent significant time and money on your job — often more than you have.
They have covered costs for drafting, estimating, internal reviews, administration, and consultation. They have committed resources, booked in early trades, and absorbed the time it takes to win your business.
This is important, because it means you have leverage. Many clients assume that once they’re presented with a contract, it’s take it or leave it — but that’s not the case.
At this stage, the builder wants to proceed. They are invested and focused on closing the deal. If something in the contract concerns you, this is the time to raise it.
Ask your questions. Make your requests. Be reasonable, but clear. You might be surprised how much flexibility opens up once they know you’re serious about signing — and serious about protecting your interests.
Guardian Tip: You have more power before you sign than at any other point in the build. Use it. If you’re unsure, don’t be afraid to ask questions — even the hard ones. Builders who value your business will answer them. Builders who don’t may not be worth signing with.
“Whatever it is, the way you tell your story online can make all the difference.”
Don’t Sign Blind
This is the final — and most important — point.
Every clause in the HIA contract is enforceable. Every margin, timeframe, inclusion, variation process, and legal definition becomes binding the moment you sign.
Builders work with these contracts every day. They understand the structure, the risks, and the wording inside out.
Most clients do not.
And that’s where problems begin — not with bad builders, but with good people who never got the support they needed at the point where it mattered most.
Key clauses to look at closely include:
- Clause 12.4 — Variations and approvals
- Clause 16 — Ownership of documents
- Clause 33.7 — Adjustments to allowances
- Consumer Guide Checklist — Provided as part of your pre-signing pack
Guardian Tip: Do not sign a contract until someone who works for you has read it line by line. Not a sales rep. Not a friend who built five years ago. Not a solicitor who glances over it. You need someone who knows building contracts, client-side risk, and what happens when things go wrong. This one step could protect you from months of frustration — or save you thousands.
“Whatever it is, the way you tell your story online can make all the difference.”
Looking for land in an Estate instead?
This guide covers land in knock down rebuild — but if you're purchasing within an estate:
“Whatever it is, the way you tell your story online can make all the difference.”
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