Home Owners Warranty

Hello all,
I have read all the messages so far. If you are about to build, be concerned, very concerned!

My case should be a lesson to all. I completed a building project with a registered builder which included my new home. this project was completed basically on budget and only ran six weeks over the completion date. There were no real defects, but I was fairly easy going.

As a result we decided to use the same builder to redevelop my partners old home and the investment property I had purchased next door. We felt safe with the builder we had used before and contracted him for the job. It was all very friendly as we had a relationship. The contract was for eight months, he assured me that the time was ok and that he would have different teams working on each house. One of these homes was to be our retirement house and suited us down to the ground, it also incorporated many items of a personal nature.

The builder abandonned the site some two and a half years later. I had been advised throughout that I should not sack the builder as the project would stall for at least 12 months. We had four houses that were incomplete, with no certificates with a list of defects that totalled many, many pages and hundreds of thousands of dollars! This mess sitting on real estate of considerable worth. We also had a mortgage which should have been gone some 22 months earlier and now costing more as WE were in default because of the builders failure.

We claimed on our Home Owners Warranty. Five months later they denied having recieved the claim, even though we had correspondence with them. They blamed an employee who was no longer employed there. We resubmitted the claim. They denied it some 88 days later to avoid the deeming clause. Now I knew why they went through the scam of not having recieved the claim previously!

I had commenced the action in VCAT against the builder and discovered that there was at least one other claim ahead of ours in the VCAT systemfor this builder. The other claim got to judgement first, and the builder ordered to pay $200,000+ and the insurer to pay $170,000+. The builder promptly went into voluntary liquidation, and we joined the insurer to our action in VCAT.

Meanwhile we could do nothing with our houses, we had no certificates so could not sell or live in them. The bank took them from us and surprise they could sell them "as is" at a huge loss, so they took my home as well for THEIR shortfall! It was sold and I am told that I still owe the bank money! This after we owned two properties outright to start with!

I still fight VERO and they inform me that I have no claim as in their opinion we have suffered no loss. They now say that we are in the wrong jurisdiction and want us to start over again in the Victorian Supreme Court.

Our losses total $1.8 Million +

Meanwhile the builder hasnt spoken to us for over two years, and still goes home to his home every night. I am now renting.

I have sent emails to our illustrious premier and cabinet ministers and am still waiting for a reply some four weeks later. I am now taking this mater to the public and aim to embarass them all into change. I hope every consumer who has been bitten by this system will take just a half an hour EVERY day from now to write to their member of parliament, consumer watchdog, newspaper, and whoever else they can think of to get the ball rolling faster to get this system changed. It is imperative that this becomes an election issue in Victoria and stays in the spotlight until it is changed.

All new home owners other than those in Queensland need to understand that the Home Owners Warranty insurance they have is NOT WORTH THE PAPER IT IS WRITEN ON! They will only find out the limitations after they make a claim, and then it is too late

Hi Rada,

What a disgrace! My heart goes out to you & your partner for having lost so much & to then also have to endure the enormous strain that litigation places on you. Unfortunately, as you are now all to aware, you are correct, Home Warranty Insurance is a scam. It is by no accident that it is a scam as it was always devised to be a system of gouging consumers & builders with minimum exposure to losses.

I first got exposed to the HWI through my former employer who was being extorted by the insurer to pay money for a previous claim (which they settled against his wishes & knowledge!!). What they then did was to deny him warranty cover every 3 months or so in the hope he would pay the money to stop them ruining his business. NOT WITHSTANDING THE FACT HE & EVERYONE ELSE PAYS PREMIUMS TO BE COVERED AGAINST SUCH EVENTS!! The fact you pay for insurance then have the bastards come after you for the settlement beggars belief.

In the end it took a surprise question on talk back radio to the NSW minister (Della Bosca) to arrange a meeting with the insurer, the head of the OFT & my employer to bring about a resolution. The system is a rort. The insurers are making hundreds of millions of dollars every year out this nice little earner thanks to the governments mandatory requirement for HWI which has effectively created a state sanctioned monopoly.

If there is a ray of sunshine out of this it would be the Builders Collective of Australia. They helped me out enormously during my fight with the insurers & i would advise you contact them immediately to see what can be done for your case.

Please feel free to contact me via my email & we can discuss further.

You would have been through much to reach this point but don't throw in towel yet. If you can hold the line for a bit longer this thing is about to be blown right open & its a very messy & sordid affair. Heads wil roll & compensation to people like yourself will be high on the agenda.

Thanks Paris,
I understand that much is happenning and hope to be part of it. You noted the stress of the battle, I should have mentioned that as a result of the stress, I suffered a severe Heart Attack on 26th December 2005(at least I had a good Christmas!) with permanent damage and ongoing health issues, in no small part due to this matter. That is their legacy to me.

Regards

I'm sorry to hear that rada. I hope your health improves along with the HWI situation so no-one else has to go through what you have been enduring.

Now let's give these bastards a legacy they carry for the rest of their days. That is a lengthy prison sentence & for us to recoup the money they've stolen.

Cheers Rada

Sorry to hear this...
Any opinion on what this means for someone that is deciding between a small and large builder?

Whether the builders are large or small doesn't really matter when claiming on HWI. Its is simply a scam & not worth the paper it's printed on. You are not protected. A policy can only be claimed upon death, insolvency or disappearance of the builder. Then you get to fight the insurer.

There is a rating catagory for builders & this was to placate the big end of town as they pay much lower premiums than most cottage industry builders. The fact it's cheaper doesn't really help when it's a worthless document.

The best way to protect yourself is to do your homework on the builder & to stay on top of the project. Contact your states licensing & regulatory body for an information brochure to assist in choosing the right builder. [b]YOUR CHOICE OF BUILDER WILL BE THE MOST IMPORTANT DECISION YOU MAKE IN REGARDS TO YOUR PROJECT.[/b] Take your time & investigate them. These tips may help:
1. Check licensing body for any claims or complaints made against the builder.
2. Is the builder licensed to do the work you require.
3. Check current building sites of the builder & call as many referees as possible who have engaged the builder.
4. Know the contract you are about to enter into. Ask for a standard copy of their contract so you can discuss & clarify aspects during the negotiating period. Most builders prefer to use industry contracts which favour them & the bigger players often have their own made up that always favour them.
5. Talk with friends or associates who are in or have experience in the industry.
6. DON'T BE RUSHED INTO ANYTHING. TAKE YOUR TIME & DO THE RESEARCH.

Having a good understanding of your rights & resposibilities prior to the work starting is your best protection. Finding a reputable builder (there are quite a few out there) is the main task you should set yourself. Building is a great challenge but can also be very rewarding when you get what you had hoped for.

If i can be of any help just let me know.

Good luck.

Hi Everypme,

Stories like these are the reason we started our service,

Our service can provide consumers with an in-depth commercial background check regarding any Builder you might be considering.

Reports cover all Builders previous and current business dealing along with checking for any previous or current court actions that might have been initiated.

We also check the current commercial credit standing of the Builder along with checking to see if the Builder has ever been personally bankrupt etc. Reports cost $295.00 each and are completed generally within 24 hours.

For more information feel free to call or email me.

www.buildercheck.com.au

BuilderCheck, this is a service that SHOULD be undertaken by the Building Commission. If consumers cannot take comfort in a builders registration then why on earth would we go through with it. Keep in mind that the number one criteria for registration is the ability to buy Home Owners Warranty Insurance - without it there is no registration.

HOW eligibility is ALL about financials but you are right, there are no guarantees and the insurance is basically useless anyway as we have seen on this topic.

If consumers want to check VCAT Building List then do the search yourself as all VCAT DBLdecisions are available on the Austlii website @
http://www.austlii.edu.au/au/cases/vic/VCAT/
Search tip : type 'domestic building' in the search window and select
'title only'. You can even put in the Builders name once you get the hang of the search interface.

In addition, financial and credit checks are available off the net via sites like Dun & Bradstreet and have been for years.

What sort of Professional Indemnity insurance do you offer a home owner if a 'recomended' builder cannot complete the job or will not rectify defects and eventually goes out of business?

builda……. thank you for your feedback regarding our service,

We are not expecting to get any support from Builders regarding our service and the negative tone of your response was fully expected. But that’s OK because we work for Consumers not Builders.

In response to your last point, our service is not designed to provide any absolute guarantee that a Builder will perform during the construction of someone’s home. It is designed to allow Consumers the ability to be “fully informed” about the past and present commercial standing of a Builder they are about to spend hundreds of thousands of dollars with to build their home. We are simply arming consumers with more information to help them make more informed and better choices.

I don’t know about you but I would be concerned about handing over 300k to a previous bankrupt. The sample report attached to our website is based on an actual builder who is currently “fully registered” and operating a building business in Victoria. He is a discharged bankrupt and has been the owner of 3 previously failed building companies since 2001. This Builder is registered and insured !

builda……. I would be careful in terms of offering advice to forum members in terms of what data sources are available to conduct their own DIY background checks. Simply ordering a report from D&B or looking on a website for published judgments is only covering about 30% of the total data available when conducting a commercial background check on an individual or business.

You might want to look at what kind of “Professional Indemnity insurance you offer forum members” if you are going to keep giving out such information so freely.

The difference with me is that I am not charging people $295.00 for the specific advice OR information, and I am not giving it to them anyway, just advising where else the information is available.

You are charging a fee for the same thing so it is a bit rich to suggest that I have a legal liability on this forum, when you charge a fee for actually supplying the information but somehow have no liability? Maybe I am missing something here but the logic does not stack up.

Besides, you still haven't answered the question: Do you have PI insurance to protect consumers (and yourself!) in case you get it wrong and a 'vetted' builder turns out bad? Maybe you don't need it but to my mind while you are working for a fee, a consumer would have every right to rely on your professional information, direction and/or advice on that builder.

My point is that the information you provide is exactly what a consumer can find themselves if they pay the fees direct to these other organisations and want to spend the time looking.

For you to suggest that only you have access to 100% of this information is not quite true. Anyone can get the information, some of it is not generally for free, but it is available.

Our Credentials:

We have been providing a range of commercial risk assessment services to a number of Federal, State and Local Government departments including a number of major Australian Companies now since 2001.

We recently conducted all of the commercial background checks for Service Providers to the Commonwealth Games here in Melbourne. PI and Public Liability Insurance are mandatory if you want to work for any government department in this field.

I am more than happy to provide a long list of references of our current government and corporate clients to any potential customer that requests it.

builda……….. It seems that I must have hit a raw nerve with you regarding this topic ?……..I am not entirely sure what you are expecting to achieve with all these negative and aggravating statements regarding our service ?

We are just trying to offer I service that we think consumers would really benefit from ?.....we not making any wild statements or absolute guarantees ? .....and yes people can go and find the information themselves if they choose…….I have NEVER said otherwise.

What makes us different is that we are now offering a service that has been available and used by government departments and major companies for years to assess the commercial standing of individuals and businesses. We’ve just made it available to consumers.

I would be really keen to get some feedback going on this forum on what Consumers think of our service rather than from a Builder ?

Anyone ??
[/quote]

Correct, you hit a raw nerve but it seems that I have as well - and too bad, you will hear from a builder once more.

I have no problem with all your credentials and thank you for finally answering the initial question. It was not meant as a slur, but in the realm of consumer protection (so-called) there are countless shonks and wannabees that all claim to be acting in the consumers interest but rarely do. Not suggesting this is your case but merely asked the question in order to get the correct answer - thankyou.

Anyway, the raw nerve is what I originally alluded to in my first statement in response to your initial post being: As builders we have multiple layers of statutory checks (same for commercial) but there is still a need for a service like yours. That is, even with the registration, warranty, Construction Supplier Register etc audits there are still issues with solvency in the building industry.

If the regulators and the insurers cannot find the stuff you find, then why do they waste our time and money (consumers money actually) doing it. They would be far better off outsourcing to you in the first place instead of doubling up the process all along the chain. This doubling up just adds cost, initially to builders but eventually directly to consumers.

All this additional doubling up achieves is a complete devaluing of our builder registration. That is, our commercial and domestic registration starts to be meaningless because the consumer (our valued clients!) have no confidence that a properly accredited and registered builder can or will be able to complete their project. Yes, it is a raw nerve and don't take it personally - it is not your fault but merely evidence of a failing system that is creating the demand for a service like yours in the first place and I make no apologies for being touchy about it!

Andrew / Buildercheck, Batter up!!

I would be very careful about slagging members, not to mention thrusting your wares on a forum as you, and a few others seem to have done.

I have spoken to builda both on and off the forum, I find him professional and very helpful. He is someone I have spoken to regardng advise that I have not been able to get elsewhere. He, unlike yourself, has made a clear point (and has stated on this forum) that he is not here to push his wares or services down the throats of all and sundry on this group. He is here to offer his experience and advise on a forum, as a service to the community. There is no point on this forum where you see his real name, the company he works for and contact numbers. If people want to make a choice to follow any professional's advise, then that is their choice.

The people on this forum are here for information, and what you have may or may not be suitable for people to use. If users chose to use your product, then good luck to them and to you. Builda asked you a question, and you have only just answered it. Again, if people want to make a choice to follow any professional's advise, then that is their choice.


Quote

"builda……. I would be careful in terms of offering advice to forum members in terms of what data sources are available to conduct their own DIY background checks. Simply ordering a report from D&B or looking on a website for published judgments is only covering about 30% of the total data available when conducting a commercial background check on an individual or business. "

Does this mean if he cannot put any notes on a car buying forum if he did the same thing when buying a new car?? I dont think so. Could you please tell your target audience about the other 70%, this may make your produce more attractive, and explain what makes you differnet to many other services. One thing people on this forum have found is personal experiences with each builder from other customers, myself included.

Builda mereley pointed out some sources where you could go and source information. Some people might not be in a position to afford $295 for your report, What if they cannot decide between 3 builders? BTW IF you had the case you refer to on your website, then how would you know who was building the house, if the buyer was going through Hotondo, as the report stated.

Regarding the fact you work for consumers, not builders. It is in the interest of parties such as Builda to do the job properly, keep their business affairs in order and not cause the troubles that has obviously prompted you to start up your business and promote your service. Otherwise he will go out of business, or end up being the subject of your reports, and on Today Tonight.

Quote "I don’t know about you but I would be concerned about handing over 300k to a previous bankrupt"

Please treat the people on this forum with a little respect, we are not all stupid!

Quote
"You might want to look at what kind of “Professional Indemnity insurance you offer forum members” if you are going to keep giving out such information so freely." Hello wild statement. Do you do insurance as well? - This just made stupid remark of the day.

In summary Andrew, you might want to think about the image you portray to potential customers, and how you treat them. I have no doubt that people will use your service, and good luck to you for providing it. It is obviously a service for people who do not have the time, money or incling to go and source this information, and this is a void which you are attempting to fill.

I agree with Builda when he said that "this is a service that SHOULD be undertaken by the Building Commission. If consumers cannot take comfort in a builders registration then why on earth would we go through with it. I would think that every building company and or franchise would come up on one of your reports with some form of negativity, due to the downturn in the housing markets we have seen across the last few decades.

Whilst your attempt to fill this void is applauded, you might want to sit back, think about what you have said.

BTW I am not a builder, but I am building

Adrian B

Thanks for the feedback Adrian,

I make no apologies for promoting our services to the forum and I am sure that by returning some of buida’s fire regarding the validity of our service, this wont harm my image too much.

Ouch! I know there's some sharks out there, but I had never realised so many people had been so severely affected by * builders!

I promise we're not all bad

First off: Yes - Home Warranty Insurance is a joke. It offers very little protection for consumers, and it is a MASSIVE headache for builders - to the extent that some have gotten out of the industry for good.

Secondly, there is a simple way to find out if a builder is worth his salt. SPEAK to his previous clients - don't accept written references. I would ask for the builder's 3 most recent clients, that way he can't pick and choose the 'good' jobs. Even with the best builder, not every job is good.

Finally, I think one of the biggest issues to be addressed is the systems (or lack thereof) that builders have in place. Most problems in construction occur because of inadequate planning, and particularly estimation. I cringe when I hear of builders applying a square meter rate to a one off architectural home, then following up with no cost or time control. One day, it's going to end in tears - probably the client's AND the builder's.

I think I might write up a more detailed checklist for procuring a builder. The one on the fairtrading site leaves a lot to be desired.

Andrew

Hi burned,

You and I are not the first to think that the Home Warranty system needs to be reformed. Check out http://www.builderscollective.org.au to read some of the stories from my side of the fence.

I'd like to hear your full story, similar to how rada wrote at the start of this post. I'm sure the rest of the forum may benefit too.

However, please don't tar all builders with the same brush. There are some that are genuinely good businesspeople, and are deeply concerned for the welfare of their clients. For example, when we had a massive hailstorm on the Coast here nearly 2 years ago, the first thing I did (when I felt safe to come out from under the table ), was to send a couple of my guys around to each of the houses we had built in the area to do a damage inspection and make any emergency repairs. This enabled the owners to get their insurance claims (if needed) in fast, and we could repair the works before any further damage was done.

There are many other builders that extend this level of service - and despite what people think, our profit margins are no more spectacular than other builders, or even small businesses. Often we will not have the cheapest tender price, because we have the experience in place to make sure we don't miss anything. Problems arise if a builder gets halfway through a job and realises that he's forgotten to allow for, say, the cladding (it happens )

Engaging a builder is not a process to be taken lightly. You wouldn't buy a car without spending weeks scouring the Internet for articles. It's a lot harder to do the same for builders.

Andrew

Hi burned,

Please don't get me wrong, as it's very difficult to convey emotion through an online forum - I don't think you're having a go at me personally.

Would you be able to private message me the name of the builder, and maybe a brief rundown of your story? I really would be interested to hear.

I do have a very strong interest in promoting reform in the residential building industry warranty scheme. Sure, I can trawl AUSTLII and read some of the horror cases to see what goes on, but nothing beats speaking with people who have painfully been through the process.

If I was building a house with a contractor, my biggest concerns would be as follows:
1. Is the builder going to do the work to the quality I expect, and within the contract conditions agreed to?
2. Is the builder going to remain solvent thoughout the job?
3. What will happen if the builder can't finish the job, eg. death, disability, etc?

If anyone feels that they can add anything to this list, please do.

Now, under the Home Building Act, and the associated Home Warranty Scheme (in NSW I'm talking) these are the issues they are trying to protect you, the purchaser from. The problem, in my opinion, ****** in the execution, not the principals that the Home Warranty Scheme is based upon.

Put simply, there NEEDS to be a better insurance policy for residential building. One that:
1. Protects the consumer for the FULL value of their construction, not the ridiculously low $200k cap.
2. Is more detailed in its policy wording, so that consumers know exactly what they are protected from, and for how long. There is an insurer in the states whom I respect - see: http://www.qbwc.com/Builder/Liability_and_Coverage.asp - note how it is THE BUILDER who must warrant everything for the first two years. This is fair enough, and encourages quality workmanship - although some liability must also be borne by the consulting engineer.

The biggest problem, is that insurance Companies will refrain from paying out wherever they can - until this changes, home wrranty 'protection' will remain a joke.

I'd love if Australian Standards could develop a standard along the lines of ISO9000 for builders, who are only then able to obtain good insurance cover. I'd invest the money to meet it in a second.

Andrew