Terminating a contract is a serious matter. Consumers should obtain legal advice before terminating a contract. Most contracts provide a procedure for termination that must be strictly followed. Normally the procedure requires the consumer to notify the builder in writing of breaches of the contract and require the builder to remedy the breaches within a certain period of time. If the breaches are not remedied within that period of time the consumer is then required to deliver a second notice terminating the contract.
A consumer who fails to strictly follow the contractual procedures for the termination of a contract may later be found to have wrongfully terminated the contract and be liable for damages to the builder. For this reason, get legal advice before terminating a building contract (see Chapter 2.1: Legal representation).
All contracts entitle the builder to terminate the contract in certain circumstances.
Domestic Building Contracts Act 1995 (Vic)
Under section 41 of the DBC Act, a consumer may terminate a major domestic building contract if either the contract price rises by 15 per cent or more or the contract has not been completed within one-and-a-half times the period it was to have been completed in and the increased time or cost was not reasonably foreseeable by the builder at the time the contract was entered into.
Again, legal advice should be obtained if a consumer proposes to terminate a contract under these DBC Act provisions. For information about obtaining legal services, see Chapter 2.1: Legal representation.
Aluminium composite products (flammable cladding)
Since the fire in the Lacrosse building in Melbourne on 24 November 2014, aluminium composite products (ACP) have come under scrutiny. Many high-rise residential buildings in Melbourne are clad with ACP. Such cladding is highly flammable and may pose a risk to occupants in the event of a fire. Such cladding does not comply with the Building Regulations.
In July 2017, the Victorian Government established the Victorian Cladding Taskforce to investigate the extent of non-compliant external cladding on buildings in Victoria. Hundreds of buildings were identified as having non-compliant cladding, predominantly ACP.
In many cases, a local council may issue a notice to the building’s owners and owners corporation requiring that the non-compliant cladding be replaced.
The cost of replacing non-compliant cladding is significant. There are also the legal fees involved with recovering compensation from builders and consultants. These costs and fees are causing financial hardship for many property owners in Victoria.
In 2020, the Victorian Government launched Cladding Safety Victoria. This is a $600 million program to replace the flammable cladding on up to 400 buildings in Victoria within two years.
For more information about Cladding Safety Victoria, and to check if your building qualifies for the program, see https://www.vic.gov.au/cladding-safety.