Verbal variations on a Victorian home build

On the frame walk, the owner asks for the kitchen window to move along the wall and go up a size. You say yes, the carpenter moves it that afternoon, and it goes on the next progress claim. On a major domestic building contract in Victoria, verbal variations like that one can leave the builder with no right to be paid for the work.

Sections 37 and 38 of the Domestic Building Contracts Act 1995 set out how a variation has to be put on paper, one for changes the builder wants and one for changes the owner wants. Both end the same way for a builder who skips the paper.

Does the job fall under these sections?

Both sections apply to a major domestic building contract. Section 3(1) of the Act defines that as "a domestic building contract under which the amount of money that a builder will receive for the carrying out of domestic building work is more than the amount fixed by the regulations".

For the purposes of the definition of major domestic building contract in section 3(1) of the Act, an amount of $10 000 is fixed.

When the owner asks for the change

A building owner who wishes to vary the plans or specifications set out in a major domestic building contract must give the builder a notice outlining the variation the building owner wishes to make.

There is one shortcut, and it is narrow.

If the builder reasonably believes the variation will not require a variation to any permit and will not cause any delay and will not add more than 2% to the original contract price stated in the contract, the builder may carry out the variation.

All three conditions have to hold, and the 2% is measured against the original contract price, not the price after earlier variations. A window that changes size may need the permit varied, which rules the shortcut out however cheap the change is.

In every other case, section 38(3) requires the builder to give the owner either a notice that states "what effect the variation will have on the work as a whole being carried out under the contract and whether a variation to any permit will be required", the builder's "reasonable estimate" of any delay, and "the cost of the variation and the effect it will have on the contract price", or a notice that the builder refuses or is unable to do it, with the reason.

A builder must not give effect to any variation asked for by a building owner unless: (a) the building owner gives the builder a signed request for the variation attached to a copy of the notice required by subsection (3)(a); or (b) subsection (2) applies.

When you need the change

Section 37(1) requires a builder who wants to vary the plans or specifications to give the owner a notice that describes the variation, "states why the builder wishes to make the variation", states its effect on the work as a whole and on any permit, estimates any delay, and "states the cost of the variation and the effect it will have on the contract price".

Under section 37(2), the builder "must not give effect to any variation" unless the owner gives "a signed consent to the variation attached to a copy of the notice", or a building notice or building order requires it in the circumstances that subsection sets out.

The money test for a builder's own variation is stricter than for an owner's, and it catches builders who did everything else right.

A builder is not entitled to recover any money in respect of a variation unless: (a) the builder: (i) has complied with this section; and (ii) can establish that the variation is made necessary by circumstances that could not have been reasonably foreseen by the builder at the time the contract was entered into; or (b) VCAT is satisfied: (i) that there are exceptional circumstances or that the builder would suffer a significant or exceptional hardship by the operation of paragraph (a); and (ii) that it would not be unfair to the building owner for the builder to recover the money.

A signed notice is necessary but not sufficient. The builder also has to show the variation could not reasonably have been foreseen when the contract was signed. Rock in the footings might meet that. A change the builder would simply prefer does not.

What verbal variations cost when they go wrong

A builder is not entitled to recover any money in respect of a variation asked for by a building owner unless: (a) the builder has complied with this section; or (b) VCAT is satisfied: (i) that there are exceptional circumstances or that the builder would suffer a significant or exceptional hardship by the operation of paragraph (a); and (ii) that it would not be unfair to the building owner for the builder to recover the money.

So the owner who asked for the window, saw it moved and was pleased with it can refuse to pay for it, and the builder's route to the money runs through VCAT and a test of exceptional circumstances or hardship. Where recovery is allowed, sections 37(4) and 38(7) limit it to "the cost of carrying out the variation plus a reasonable profit".

Neither section applies to prime cost items or provisional sums. Sections 37(5) and 38(8) both say the section "does not apply to contractual terms dealing with prime cost items or provisional sums". Those are adjusted under the contract's own terms.

Paperwork that survives a site walk

The Act's lists are short enough to fit on one page, which is what makes this fixable on site rather than in the office a week later.

1. Carry a variation notice with a box for each item the Act lists: the change, the reason if it is yours, the effect on the work and on any permit, the delay, the cost, and the new contract price.
2. Get the owner's own request in writing first. A text or email describing the change is a start, and it is what section 38(1) asks of them.
3. No trade starts a change until the owner has signed. Make that the site supervisor's rule, including for the small ones.
4. Photograph the signed page and send it to the owner the same day, so both sides hold the same copy.
5. Keep a variations register for the job: number, date, signed or not, amount, and which progress claim it went on.

Only claim a variation that has a signed notice behind it. An unsigned one on a progress claim is an argument about the whole claim waiting to happen.

This article is general information about the Domestic Building Contracts Act 1995 (Vic) and the Domestic Building Contracts Regulations 2017 (Vic), not legal advice. It does not cover the contract's own variation clauses, cost escalation, or building work in other states. Where the Act introduces a list with a dash, the quotes above show a colon. It quotes the Act as at version 094, incorporating amendments as at 1 July 2026, and the Regulations as at version 004, incorporating amendments as at 1 July 2021, and is current as at 14 September 2026.