ACT legislation does not require a written contract for residential building work, but the ACT Government’s City and Environment Directorate strongly recommends one that identifies the builder’s licence details and any insurance policies held. For work over $12,000 on some residential buildings, the builder must have residential building work insurance or a fidelity fund certificate before work starts. From 1 January 2025, the minimum insurance amount increased from $85,000 to $200,000 and the time limit to lodge a claim increased from 90 days to 180 days (ACT Government’s residential building work insurance guidance; figures checked 1 October 2026).
Why does a written contract still matter in the ACT?
A written contract is binding and records both parties’ rights and responsibilities. It helps agree the costs, timeframes and expectations for the work, and can provide a process for variations, extensions of time and disputes.
There is no mandatory cooling-off period for ACT building contracts, so be ready before signing. If a clause is unclear, or you want to add or change a term, obtain independent legal advice. The ACT Government also recommends independent legal and financial advice on building contracts being considered.
What should the contract say about the builder’s licence and insurance?
The contract should do more than mention that the builder is licensed or insured. It should give enough accurate information to connect the builder, project and work with the documents supplied separately.
| Contract entry | What to look for |
|---|---|
| Builder and project identity | The exact names of the homeowner and builder, the work address, contract date and signatures of both parties |
| Builder’s licence | The licence details and, where the work requires a licensed builder, the correct licence class |
| Insurance held | Details of any insurance policies the builder holds |
| Required project cover | A fair termination provision if the builder cannot obtain required insurance within a prescribed time |
| Work and price | Attached plans and specifications, important features and inclusions, and the contract price or a clear explanation of unknown or changeable costs |
| Changes, payments and completion | The payment stages and amounts, written variation process, practical completion, defects liability, dispute resolution and termination terms |
Most contracts require variations to be in writing and signed by both parties. Any important inclusion should be specified so it cannot be changed without the homeowner’s agreement.
The project policy or fidelity fund certificate is separate evidence. Do not treat a general reference in the contract to policies held as a substitute for checking the actual project document.
Who must obtain the project insurance, and when?
The builder must obtain residential building work insurance or a fidelity fund certificate before applying to the certifier for a building commencement notice and before starting work. Where insurance is required, the certifier must verify that it is in place before issuing the notice.
The evidence must be either:
- A policy issued by an authorised insurer; or
- A fidelity fund certificate issued by an approved fidelity fund scheme.
The builder must provide the owner with evidence of that cover. Check the current regulator page if the project type, cost or coverage rules are unclear.
How should you check the separately supplied evidence?
The key check is whether every detail is complete and accurate, especially the work cost and the builder’s name.
- Obtain the document from the builder. Ask for a copy of the project insurance policy or fidelity fund certificate and keep it with the signed contract.
- Check the builder’s name. Compare it carefully with the exact builder named in the contract. Ask for corrected evidence if the name is incomplete, inaccurate or different.
- Check the work cost. Confirm that the stated cost is complete and accurate and ask how it relates to the contract price and any written variations.
- Read all project details. Do not concentrate only on the insurer’s or fund’s name; check the rest of the document for completeness.
- Confirm the document type. The project should be supported by an authorised insurer’s policy or an approved fidelity fund scheme’s certificate.
- Check the timing. The builder should have obtained the required cover before seeking the building commencement notice and starting work.
- Read the PDS and certificate terms. Check the policy’s PDS for its cover, exclusions and claims process, and read any conditions attached to a fidelity fund certificate.
If information is missing or does not match the contract, ask the builder to correct it before relying on the document.
How do deposits affect the insurance check?
At the check date, the ACT Government’s contract guidance says there is no limit on the initial deposit in the ACT, although industry practice is usually up to 10% of the total contract price. That deposit is typically paid in advance for the builder’s security and initial material costs.
| Point | ACT Government guidance | Contract check |
|---|---|---|
| Initial deposit | No legal limit; industry practice is usually up to 10% of the total contract price | Confirm when it is due and how any lender must release funds |
| Project insurance where work is not completed | The maximum amount claimable under the project insurance is $10,000 | Compare the proposed deposit with the possible incomplete-work claim |
| Homeowners warranty insurance | Covers only up to $10,000 for deposits and is not residential building work insurance under the Building Act 2004 | Do not treat it as a substitute for the required project policy or fidelity fund certificate |
| Progress payments | Good practice is to pay only for work already completed | Check that the contract says this clearly |
The matching $10,000 figures do not make homeowners warranty insurance and residential building work insurance equivalent.
What should you do if the contract or evidence is unclear?
Ask the builder to identify the missing information or provide corrected documents. The contract should allow fair termination if the builder cannot obtain required insurance within the prescribed time.
Before signing or starting work, check the ACT Government regulator page for the current project requirements and read the relevant policy PDS or certificate terms. This is general information, not legal or financial advice.
Sources
- Hiring a builder - City and Environment Directorate - Planning
- Residential building work insurance - City and Environment Directorate - Planning
FAQ
Is a written building contract compulsory in the ACT?
No. ACT legislation does not require one for residential building work, but the ACT Government strongly recommends a written contract because it is binding and records costs, timeframes, rights and responsibilities.
What should I check on the insurance policy or fidelity fund certificate?
Check that all details are complete and accurate, particularly the work cost and the builder’s name. The builder must provide the owner with evidence of the project cover.
Does homeowners warranty insurance satisfy the project-cover requirement?
No. Homeowners warranty insurance covers only up to $10,000 for deposits and is not residential building work insurance under the Building Act 2004.
Who obtains the project insurance, and when?
The builder must obtain it before applying for the building commencement notice and before starting work. Where required, the certifier must verify the insurance before issuing the notice.
When does the 180-day claim period begin?
Under the ACT Government guidance, it begins when the homeowner becomes aware that the builder has become insolvent, died or disappeared. Check the PDS for the required claim process.
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