A domestic building contract is one of the largest financial commitments most people make. Victorian law gives homeowners a substantial set of protections - but only if you know what they are and insist on them.
The Domestic Building Contracts Act 1995 governs residential building work in Victoria, and it was significantly reformed in 2025. Understanding what it requires is the difference between a protected transaction and an expensive dispute.
Have a building contract to sign or a dispute with your builder? Get the contract reviewed before you commit - the protections only work if the contract is right.
Book a Free Consultation →The Implied Warranties
Every domestic building contract in Victoria carries implied warranties that cannot be excluded. The builder warrants that the work will be carried out with reasonable care and skill; in accordance with the plans and specifications; using good and suitable materials; in compliance with the law; and that the completed home will be fit to live in.
Two features make these warranties powerful. First, they run with the building - a later owner can rely on them, not just the person who signed the contract. Second, they cannot be signed away. Any term of a contract that tries to exclude or restrict them is of no effect.
Deposit Limits
The Act limits how much deposit a builder can require before work starts. If a builder asks for more than the allowed amount, that term can be unenforceable - and you may have grounds to recover any overpayment. A builder demanding a large upfront deposit is one of the clearest warning signs to seek advice before signing.
Progress Payments
Progress payments must be tied to stages of completed work, with a general proportionality requirement - you should not be paying substantially ahead of the work actually done. This protects you if the builder becomes insolvent mid-project: the less you have overpaid, the less you stand to lose. Insist that payment stages and percentages match the contract and the Act, and that each claim reflects work genuinely completed.
What the 2025 Reforms Changed
The Domestic Building Contracts Amendment Act 2025 delivered the most significant update to the Act in decades. The key changes: deposit limits, progress payment stages, and progress payment limits can now be prescribed in regulations, with a general proportionality requirement; cost escalation clauses are now permitted for major domestic building contracts of $1 million or more, with a 5% ceiling on price increases and additional consumer protections; and the definition of domestic building work was aligned with other jurisdictions.
For most homeowners, the practical effect is stronger, clearer rules about when and how a builder gets paid. For larger projects, cost escalation clauses are now a live issue to understand before signing.
Variations and Disputes
Variations - changes to the scope of work - must be recorded in writing. A builder cannot simply do extra work and add it to the bill. If a dispute arises, Domestic Building Dispute Resolution Victoria and VCAT provide a pathway, but a certificate of conciliation is generally required before proceeding to VCAT.
How Phan Campbell & Associates Can Help
At Phan Campbell & Associates in Footscray, our construction team reviews building contracts before you sign, advises on your rights during a build, and acts for homeowners in disputes across Melbourne and Victoria.
A contract review before you sign costs a fraction of resolving a dispute after the build has gone wrong.
Frequently Asked Questions
1. What does the Domestic Building Contracts Act protect?
It implies warranties into every domestic building contract - reasonable care and skill, compliance with plans, good materials, fitness for purpose. These run with the building and cannot be signed away.
2. What is the maximum deposit a builder can ask for?
Deposit limits are set by the Act and can be prescribed by regulation after the 2025 reforms. If a builder asks for more, the term may be unenforceable and you may recover the overpayment.
3. Do progress payments have to match the work done?
Yes. Progress payments must correspond to completed stages with a proportionality requirement. Overpaying ahead of progress reduces your position if the builder becomes insolvent.
4. What changed in the 2025 building contract reforms?
Updated deposit and progress payment rules, cost escalation clauses for $1m+ contracts (5% cap), and an aligned definition of domestic building work. If you have a contract to review, book a free consultation with Phan Campbell & Associates.