Home Building Tips for Builders in NSW
Receiving instructions from architects

It is common for a home owner to engage an architect to supervise the construction project and to issue instructions to the builder on the home owner’s behalf.  In legal terms, this person is called an ‘agent’.

Problems may later arise when the builder follows instructions given by the agent (i.e variations), and the home owner later refuses to pay for such variations because the home owner claims that the agent did not have the authority to give the builder such instructions.  Once the builder identifies that the home owner may be engaging an agent (such as an architect), the builder must take steps to protect themselves and avoid this from happening.

What is the law?

A home owner will be legally bound by the actions of an agent if it can be shown that the agent acted with ‘apparent authority’.  Apparent authority exists where a manifestation or representation (i.e verbal words, a written document, or by physical actions) is made by the home owner to the builder, and based on that manifestation or representation, the builder reasonably believes that the agent has authority to act on the home owner’s behalf.

Even if the agent did not actually have authority from the home owner, if apparent authority exists, the home owner will nevertheless be legally bound by the actions of their agent.  This will mean that if the agent has instructed the builder to carry out variations, the home owner will be legally bound to pay the builder for those variations as if they themselves had instructed the builder to carry out that extra work.

How can a builder protect themselves?

The best way for a builder to clearly create a relationship of agency between the home owner and their agent, and to give apparent authority to the agent, is to have the home owner sign a ‘Representation by Agent’ document, which states that the agent has the authority to act on behalf of the home owner and give instructions to the builder.  This document is available on the ‘Online Building Contracts’ page of our website at www.homebuildingonline.com.au.

By doing the above, the builder will have written evidence that they can later rely on to be paid based on building works that were instructed to be carried out by the home owner’s agent.

This shows that a little planning beforehand can go a long way later on.