Charging Clauses In Residential Home Building Contracts

This article considers whether a licensed contractor can insert a charging clause in a residential home building contract.

This question is important because it determines whether a licensed contractor can secure their entitlement to receive payment from a residential homeowner.  A secured entitlement helps mitigate the risk of non-payment.

Charging clauses

In the past, it was a common practice for construction contractors to insert charging clauses in their standard terms of work to secure payment of their fees.  Under these charging clauses, owners would usually grant the contractor an interest in the property the subject of the works. The contractor would then lodge a caveat over the property to record their interest.