A helpful tip if you are intending to build

It has become common in recent times for builders of spec homes to enter into a preliminary agreement with their customers to cover such things as site consultancy, preliminary earthworks, drafting and design work, document preparation and other preliminaries. The agreement is often structured in such a way that the fee (commonly $5,000 to $10,000) is payable in advance and is deducted from the contract price when the customer signs the building contract. If the customer doesn’t proceed then the builder is rightfully entitled to retain the preliminary contract fee as the price of his labours in undertaking the preliminary works.

However, what the builder is NOT entitled to do if the customer doesn’t proceed, is to change the terms of the preliminary contract by adding claims of copyright or refusing to hand over documents for which the customer has already paid.

To avoid the problem, if you are negotiating a building contract, you should ensure that the preliminary contract makes clear your entitlement, after you have paid the preliminary fee, to retain all work (including the copyright in drawings and plans) generated for the fee you have paid. After all, if you have paid for it, it is yours and you are entitled to take it. If in doubt, seek our advice before you sign the preliminary contract.

See Also:

• Building and Construction Law
• Building and Construction Disputes
• Home Building Disputes
• Commercial Litigation