Most Perth homebuyers sign a building contract without reading it. Here is what that can cost you.

1. Fixed Price vs. Cost Plus: Know What You Signed

A fixed-price contract locks in your base price, it cannot change without your written approval. That said, prime cost (PC) items and provisional sums are exceptions built into most contracts. Make sure your builder explains every one before you sign.

Cost-plus contracts expose you to the bulk of financial risk if material or labour costs rise. Avoid them where possible.

✔ Fixed-Price Contract	✘ Cost-Plus Contract
Base price is locked in at signing	Final price depends on actual costs incurred
Changes require your written approval	Material and labour rises are passed to you
Budget certainty for the whole build	No fixed ceiling on total project cost
Standard for WA residential construction	Difficult to budget or get finance approval
Watch: PC items & provisional sums can still vary	High financial exposure — avoid if possible

2. Price Escalation Clauses: What the Law Actually Says

Rise-and-fall clauses — which allow builders to pass on material or labour cost increases are prohibited under the Home Building Contracts Act 1991 (WA) and are void if included. Section 13 of the Act makes this clear: the price you agree to at signing is the price. The only permitted exception is a clause that passes on costs from increased government taxes or duties, not general material or labour rises.

If you see language like “subject to rise and fall” or “materials subject to supplier pricing” in your contract, raise it immediately with your builder. An unlawful clause may still cause a dispute even if it cannot ultimately be enforced and you do not want to be sorting that out mid-build.

⚠ WATCH FOR THIS
Rise-and-fall clauses are void under WA law, but a builder who includes one may still try to act on it. If your contract contains price-variation language beyond tax or duty changes, ask your builder to remove it before you sign or get legal advice.

3. The HIA and MBA Contracts: WA’s Standard Residential Contracts

The Housing Industry Association (HIA) and Master Builders Association (MBA) contracts are the most widely used standard contracts in WA residential construction. Both set out the framework for price, variations, progress payments, and dispute resolution. Make sure you understand which contract you are signing and what it commits both parties to.

ⓘ AT RUSCON
All our contracts are fixed price and use the standard HIA framework. We walk you through every clause before you commit, you do not sign anything you have not read.

4. Variations: Get Every Change in Writing

A variation is any change to the agreed scope of work. Under your building contract, every variation must be documented and signed by both you and the builder before work proceeds. Verbal agreements are almost impossible to enforce in a building dispute. If a change is not in a signed variation document, you have very little protection.

📋 RUSCON RULE
We never proceed on a verbal instruction. Every change including small ones goes through a written variation. It protects you and it protects us.

5. Progress Payments: What Triggers Each One

Progress payments are tied to build stages. You should not pay ahead of the stage being reached. Understand what each stage means physically before releasing funds. Your contract must specify the amount and the trigger for each payment.

Note: Under the Home Building Contracts Act 1991 (WA), for contracts between $7,500 and $500,000, your builder cannot take a deposit of more than 6.5% of the total contract price. Progress payments must represent genuine payment for work already done or materials already delivered to site.

Stage	Approx. %	Milestone trigger
Slab	~10%	Concrete poured & set
Frame	~20%	Wall & roof framing up
Lock-Up	~25%	Roof, windows & doors in
Fixing	~20%	Internal fit-out complete
Completion	~25%	Final inspection passed

Percentages vary by contract. Your HIA or MBA contract specifies the exact amount and trigger for each stage. Deposit (typically paid at signing) is separate.

6. Your Statutory Warranty and Home Indemnity Insurance Protection

WA law requires builders to hold Home Indemnity Insurance (HII) for residential work over $20,000. A builder who cannot show you their current HII policy should raise an immediate red flag.

🛡 HOME INDEMNITY INSURANCE (HII) — WHAT YOU ARE COVERED FOR
Mandatory for all residential building work over $20,000 in WA confirmed under the Home Building Contracts Act 1991 (WA)
Covers completion or rectification of building work (up to $200,000) and loss of deposit (up to $40,000) if your builder dies, disappears, or becomes insolvent within six years of practical completion — confirmed by Building and Energy WA
HII is not a general structural defect warranty — it is insurance against your builder being unable to complete or fix the work. Separate statutory and contractual rights also apply
A defects liability period (typically six to 12 months) is written into your HIA or MBA contract — during this period the builder rectifies defects at no cost to you. Builders are also required by law to make good any defects notified in writing within four months of practical completion

7. When Things Go Wrong: What WA Law Gives You

If a dispute arises, Building and Energy WA — operating under the Department of Energy, Mines, Industry Regulation and Safety (DEMIRS) — administers the complaints and dispute resolution process under the Building Services (Complaint Resolution and Administration) Act 2011 (WA). You do not have to go straight to court. Building and Energy WA resolves most disputes through this process before they reach court.

ⓘ KEY RESOURCE
commerce.wa.gov.au/building-and-energy — start here if you have a dispute with your builder. The Building and Energy WA complaints process is less expensive and faster than litigation.

8. There Is No Cooling-Off Period in WA — So Read Before You Sign

Unlike some other Australian states, Western Australia has no statutory cooling-off period for residential building contracts. Once you sign, the contract is binding. This is not a reason to panic, it is a reason to be thorough before you put pen to paper.

Use the time while your contract is being prepared to read every clause. Ask your builder to walk you through it. If anything is unclear or does not feel right, raise it before signing, not after.

Before You Sign	What to do
Read it in full	Every clause, not just the price page.
Get a second set of eyes	Someone with building or legal experience should review it.
Ask every question	No question is too small before you sign. All questions get expensive after.
Check PC items	Are the allowances realistic for the finishes you want?
Confirm HII	Ask to see the Home Indemnity Insurance certificate before you pay anything.

9. Termination: Yours and Theirs

Your contract will include clauses covering when either party can terminate. Know your rights before you sign. Key questions to ask: what happens to your deposit if the builder terminates? What compensation are you entitled to if the builder fails to complete?

⚠ BEFORE YOU SIGN
Read the termination clauses carefully. A contract that makes it easy for the builder to exit but difficult for you to recover your deposit is a contract worth questioning or not signing.

10. Five Clauses to Question Before You Sign

These are the clauses most buyers skip that cause the most costly mistakes. Run through this checklist before you commit.

#	Clause to check	Risk level
1	Rise-and-Fall Language — Any clause allowing price changes for material or labour costs is void under WA law. Flag it and have it removed before signing.	HIGH
2	PC Items & Provisional Sums — What allowances are built in? Are the amounts realistic for your finishes?	HIGH
3	Variation Approval Process — How are changes approved and priced? Written sign-off required before work proceeds?	HIGH
4	Progress Payment Schedule — What triggers each payment stage? Are amounts tied to specific milestones?	MEDIUM
5	Dispute Resolution Pathway — What process applies if a dispute arises? Is Building and Energy WA named?	MEDIUM

Walk Through Your Contract With Us First

At Ruscon, we go through every line of your contract before you commit to anything. All our contracts are fixed price. Book a free walkthrough, no obligation.

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