What Is a Preliminary Agreement – And Why You Might Need One Before Signing a Building Contract
If you are building a new home or renovating, there is a bit of legwork that needs to happy before the builder can present the owner with a building contract. That’s where a preliminary agreement comes in.
Whether you are an owner planning a new build or a builder quoting a job, a preliminary agreement is essential to help both parties get the right information upfront—so there are no surprises later.
So, What Is a Preliminary Agreement?
A preliminary agreement is an agreement between the builder and the owner that covers the early steps of a building project (before signing the building contracts)—such as site inspections, soil tests, contour surveys, and preparing plans and cost estimates. These inspections, tests and steps are essential to enable the builder to work out a fixed price for the final building contract.
Builders often need to engage engineers, surveyors, or other specialists during this stage, so a fee is charged to cover these third-party costs. Usually, the amount paid by the owner to the builder under the preliminary agreement will be part of the final contract price and deducted from the deposit required to be paid under any future building contract.
Why This Step Matters
In Queensland, builders are legally required to obtain foundation data before signing a building contract (except in very limited circumstances). Without this data, there’s a risk of unexpected price changes down the track. The preliminary agreement protects both parties by ensuring everything is properly assessed before locking in costs.
It can also set out who owns the plans and designs created during this stage so that if the build does not proceed past this point the parties are clear on their rights.
Not Just Paperwork – It’s Peace of Mind
Unlike full building contracts, preliminary agreements are not regulated under the Queensland Building and Construction Commission Act 1991. That means it’s important to have a well-drafted agreement that clearly sets out who does what, when, and how much it will cost.
Need a Solid Start to Your Build?
We offer a legally drafted Preliminary Agreement + Fact Sheet package designed to make this process simple and stress-free — for builders and owners alike.
This article provides general information and should not be taken to be legal advice. Each agreement is different and therefore you should obtain specific legal advice. If you have any questions, please do not hesitate to contact your lawyer or our team at Construct Law Group on (07) 3139 1874 or at info@constructlaw.com.au.
