What happens if my builder performs variation work that I only agreed to verbally?

In Victoria, builders are generally not entitled to recover payment for variations unless they obtain your written consent and provide a signed Variation Notice before work begins. While VCAT can grant exceptions in cases of exceptional hardship, failing to document the change in writing usually means the builder cannot legally charge you for that work.

Can my builder increase the contract price if the cost of timber or other materials goes up?

Most domestic building contracts in Victoria are fixed-price, and builders are prohibited from including cost escalation clauses unless the project exceeds $500,000. Unless the price increase relates to a specific variation, a prime cost item, or a provisional sum, the builder typically cannot pass on rising labour or material costs to the homeowner.

Are there any circumstances where a builder can skip the formal Variation Notice?

A narrow exception exists for owner-requested changes that do not require a permit, will not cause any delays, and cost less than 2% of the original contract price. However, because all three conditions must be met and verbal agreements often lead to disputes, it is highly recommended to formalise every change in writing regardless of the cost.

What should I do if a building surveyor or engineer orders a change I didn't ask for?

If an authorised person orders a variation due to site conditions or compliance issues, the builder must notify you of the change and its cost. If you do not agree with the ordered variation, you must provide your builder with a written objection within five business days of receiving the notice to protect your legal position.

Building Variations: Your Rights Under Victorian Law

Your builder calls to say site conditions are different from what was expected. Or you decide mid-project that you want a larger window in the living room. Either way, the price in your domestic building contract is about to change. Understanding how building contract variations work in Victoria, and what rights you have in the process, determines whether you pay for the change at all.

Variations are changes to the plans or specifications in your building contract after you have signed it. They can be small (a different tap fitting) or substantial (additional structural work due to unforeseen soil conditions). The Domestic Building Contracts Act 1995 (Vic) imposes strict rules on how these changes must be documented and when your builder can charge you for them.

How Domestic Building Contract Variations Work in Victoria

A variation can arise in two ways. You and your builder might agree to a change, perhaps because you want to upgrade finishes or alter the layout. Alternatively, an authorised person, such as a registered architect, building surveyor, building inspector or engineer, might order a change during construction because of compliance requirements or site conditions. If you do not agree with an ordered variation, you must advise your builder in writing within five business days of receiving the notice.

The Domestic Building Contracts Act 1995 (Vic) permits only three mechanisms for adjusting your contract price after signing:

Variations: Agreed or ordered changes to plans and specifications
Prime cost items: Fixtures or fittings included in the contract where the item or its price was not known at signing
Provisional sum items: Work that could not be fully priced at contract signing, adjusted once the actual cost is confirmed

Any other attempt to increase your contract price should raise immediate questions. Cost escalation clauses, often called rise and fall clauses, allow automatic price increases tied to labour or material costs or delay. A builder must not include one unless the contract price is more than $500,000, and even then the clause is void unless strict notice and signing requirements are met.

The Written Consent Requirement for Variations

Victorian law is direct on this point: your builder must obtain your written consent before charging for a variation. The requirement is not merely procedural. It determines whether you are legally obliged to pay.

Before any variation work begins, you and your builder must agree in writing to:

The specific changes to be made
The cost of those changes
Any impact on the completion date

This agreement is documented through a Variation Notice. Your builder should provide this document to you, and both parties should sign it before the variation work commences. The details, including the new price and completion date, must be recorded in the contract itself.

If your builder proceeds with variation work without complying with these requirements, the builder is generally not entitled to recover payment for it. VCAT can allow recovery in limited cases, for example where the variation was made necessary by circumstances the builder could not reasonably have foreseen, or where refusing payment would cause the builder exceptional hardship and allowing it would not be unfair to you. These exceptions are narrow. Proper documentation, or the lack of it, often determines the outcome.

When a Variation Notice Is Not Required: The 2% Exception

A limited exception applies to changes you request. Under section 38 of the Act, your builder may carry out a variation you have asked for without formal documentation if the builder reasonably believes the variation will not:

Require a change to any permit
Cause any delay
Add more than 2% to the original contract price stated in the contract

All three conditions must be satisfied. This exception is narrow. Many builders incorrectly assume they can proceed with larger changes without formal documentation, particularly when work is urgent or the owner has verbally agreed. Verbal agreements are difficult to enforce and often lead to disputes about what was actually agreed.

Building Contract Review: What to Check Before Signing

The time to understand your variation rights is before you sign, not when your builder presents you with an unexpected bill. We offer fixed fee contract reviews to provide cost certainty for our clients. We can identify clauses that affect your exposure to variation costs.

Pay particular attention to:

Provisional sum items: These are estimates, and the final cost may be higher. It is essential to understand how much higher the final cost might be. Your contract should specify a process for approving the actual cost before work proceeds.
Prime cost items: If your contract lists $500 for a kitchen tap as a prime cost item, you will pay the difference if you select a $1,200 tap. Understand what items are listed this way and what allowances have been included.
Site condition clauses: Many contracts allow variations for unforeseen site conditions. You should identify what triggers this clause and who determines whether conditions were genuinely unforeseen. You should not have to pay for variations that address issues your builder ought to have identified before starting work, such as rock that was predictable from the foundations data your builder was required to obtain.
Variation pricing methodology: Some contracts specify how variation work will be priced, including hourly rates for labour and markups on materials. Others leave this open, which can lead to disputes.

What to Do When Your Builder Requests a Variation

When your builder presents a variation request, do not feel pressured to agree immediately. You have the right to:

Request a detailed written quotation before agreeing
Ask for an explanation of why the variation is necessary
Seek independent advice if the cost seems unreasonable
Negotiate the scope or price of the proposed work
Refuse the variation (though this may have consequences depending on the circumstances)

If your builder says the work must proceed urgently before you can consider the variation properly, be cautious. Genuine emergencies do occur, but this is also a common pressure tactic. Ask for the request in writing and document your response.

Disputing Variation Charges Through the BPC and VCAT

If your builder has charged you for variation work without proper documentation, or if you believe the charges are unreasonable, several options exist under Victorian law.

The Building and Plumbing Commission (BPC) process is the first step for most domestic building disputes. The BPC absorbed Domestic Building Dispute Resolution Victoria (DBDRV) on 1 July 2025, bringing regulation, insurance and dispute resolution into a single agency. Since April 2017, you cannot take a domestic building dispute directly to VCAT without first attempting resolution through this official conciliation process.

If the BPC process does not resolve the matter, VCAT can make binding orders. VCAT has the power to determine whether variation charges are payable, and if so, how much.

The strength of your position often depends on documentation. Keep copies of all Variation Notices, emails, text messages, and any other written communications about changes to your project. If your builder proceeded without proper documentation, this may support your position that the charges are not payable.

New Domestic Building Contract Laws From 1 December 2026

The Victorian Parliament passed the Domestic Building Contracts Amendment Act 2025 on 11 September 2025. The new laws will take effect by 1 December 2026 and will:

Set deposit limits, progress payment stages and progress payment limits in regulations, with payments tied to completed work
Introduce a single process for variations to major domestic building contracts, whether you or your builder requests the change
Lift the cost escalation clause threshold to contracts of $1 million or more, with increases under those clauses capped at 5%
Strengthen homeowner rights to end a contract, including where costs rise by more than 15% or the completion time blows out by more than 50%

Until the new laws commence, the current rules apply. Having your contract reviewed before signing remains the most practical way to understand your rights and manage your risk.

Frequently Asked Questions About Building Contract Variations

Do I have to pay for a variation I did not approve in writing?

Generally, no. A builder who fails to comply with the variation requirements of the Domestic Building Contracts Act 1995 (Vic) is not entitled to recover payment unless VCAT allows it in limited circumstances, such as a variation made necessary by circumstances the builder could not reasonably have foreseen.

Can my builder charge for a variation caused by site conditions?

Only if the conditions were genuinely unforeseeable. You should not have to pay for variations that fix issues your builder should have identified before starting work. Builders must obtain foundations information before entering a major domestic building contract.

Are rise and fall clauses legal in Victoria?

Only in limited cases. Under current law, a cost escalation clause requires a contract price of more than $500,000 and compliance with strict notice and signing requirements, otherwise it is void. From the 2026 reforms, the threshold rises to $1 million with a 5% cap on increases.

Who resolves disputes about variation charges?

The Building and Plumbing Commission handles domestic building disputes first. You cannot commence a VCAT proceeding for a domestic building dispute without first going through this conciliation process, subject to limited exceptions.

This information is general in nature. Contact us for advice specific to your situation.