Buying a house and land package is one of the biggest financial commitments most people will make. What many buyers do not realise is that they are actually signing two separate contracts, a land contract and a building contract, each carrying its own risks. Understanding what you are agreeing to before you sign can save you significant time, money and stress.
Two Contracts, One Risk
A house and land package involves a contract of sale for the land and a separate building contract for the construction of your home. The two must be read together, because they interact in ways that are not always obvious. If one contract fails, for example if the land title does not register in time, the other may not automatically fall away, leaving you exposed.
Progress Payments
The Domestic Building Contracts Act 1995 (Vic) sets out a statutory payment schedule designed to protect buyers by aligning payments with construction progress. However, many builders use a custom Method 2 schedule that front-loads payments, meaning you pay a greater proportion of the contract price earlier in the build. If the builder becomes insolvent partway through construction, your financial exposure under a front-loaded schedule is materially higher than it would be under the statutory default.
What Is Actually Included
Inclusions lists, colour documents and architectural plans can conflict with each other, and the contract’s document hierarchy determines which one prevails. Buyers should not assume that what they saw in the display home, or what the sales agent described, is what they will receive. If a specific product, finish or feature matters to you, it needs to be expressly stated in the contract documents before you sign.
Independent Inspections
Buyers have a right to engage an independent building inspector during construction, but the contract may impose fees for each inspection visit, grant the builder additional time extensions as a result, and expressly prohibit withholding progress payments based on inspection outcomes. Understanding these conditions before signing is important, particularly if independent oversight of the build is something you are counting on.
Before signing any house and land package contract, contact Kennedy Guy Lawyers for advice. The firm acts for purchasers across Victoria and can review both the land and building contracts before execution, so you know exactly what you are committing to.