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Breaking Down Building Terms

By Abodable November 18, 2021, Read time: 6 min

Building your own home; for most, it's a whole new world that comes with its own language. Unless you're working within the industry or a seasoned home builder, the terminology used in this industry can be confusing and frustrating. 

We've compiled a list of some of the more commonly questioned terms and have broken them down in easy-to-understand language. 

If you have already spoken to a financier about wanting to purchase a home seriously, they will generally have you obtain 'Pre-Approval'. This is an amount that you will realistically be able to borrow based on your current financial situation. Without Pre-Approval, you will not know what budget you have for your home to start house hunting or if you will even be able to obtain a loan.

View our blog on the pre-approval process here to find out more.

Building Specification
This is a document listing all of the inclusions for your home. This will not include all materials (such as nails, pipes etc.), but it will consist of things such as timber types, roof coverings, bricks, floor coverings and the make and models of fixtures and fittings (such as appliances, tapware etc.). It is essential to carefully review this document as it forms a part of your building contract. The builder will order their materials and build your home according to what is listed in this specification. 

Fixed-Price Contract
This is a contract between you and the builder where the price is 'fixed'. This means that the price cant change from what is agreed. While this is the safest contract option, it's also important to know that there are allowances for the cost to change, including Latent Conditions (read more about this in our 'Building Contracts Broken Down Blog') and Variations.

If you decide to make changes to the Building Specification or Building Plans, this will result in a Contract Variation. A variation will list the change you have requested, any costs involved and any additional days that may be added to the contract time frames due to this variation. Variations can work both as additional costs and refunds. It is vital to ensure that you can afford your variations out of your pocket before the build has been completed, as the bank will generally not approve or finance variations. The builder will not hand you the keys until all variations are paid in full.

Unconditional Approval
After you have found your home, you will be required to obtain 'unconditional approval' to have the funds for your home purchase (and land purchase if applicable). You will need to provide your contracts and any other required documentation to your financier for them to finalise the loan. Your builder will require a copy of your unconditional approval letter to obtain their insurances for your home construction. 

Settlement means the money for your land has been paid to the landowner, and the land title has been transferred into your name. The land must be in your name for the builder to obtain Building Approval. They will require evidence of this in the form of a settlement document or written confirmation from your solicitor. 

BA/Building Approval
Before your home construction starts, your builder will need to obtain approval to ensure that the plans meet relevant standards and codes. They will submit plans and other required information to a Building Certifier, who assesses and approves these documents.

Now this one may seem pretty straightforward, but it can be confusing! When the builder has started works on-site, you may get excited and think there is a slab down! Commencement more generally means that the builder has cut the site to prepare your slab to go down. 

Extension of Time
Not a term you used to hear a lot of, with the 2021 building climate, extension of time notifications are more common. An extension of time is a notification from the builder advising that there will be additional days added to your contract time frame. This will occur when something has happened outside the builders' control that they couldn't have foreseen when entering the building contract with you. 

Practical Completion
Hooray! Practical Completion means you're ready to move in, right? Well, not quite. Practical Completion means that the house has been completed to the contract, excluding minor omissions and defects. So basically, the home is ready, but there might be a handle here and there to be installed, your turf might still need to go down, or it may still need a clean. At this point, you'll inspect the property with the builder, so don't worry! You'll get a chance to note anything that needs to be rectified before you move in, and it will be agreed upon with the builder at your Practical Completion inspection. 

Now, THIS is when you're all ready to move in! You would have been given your handover date and your final invoice at Practical Completion, including any outstanding variations. Once these are paid, the builder will confirm the handover date and time to give you the keys to your new home! 

Read more about the handover process in our blog on A Guide To Practical Completion.