HIA contract issue with bank

Good Afternoon

Wondering whether you have had encountered difficulties with Banks refusing a loan for constructing a house in response to clause 22 in a HIA build contract. The clause states that “The builder is not required to obtain any certificate Of occupancy or final inspection certificate relating to the building works.” We put this to the builder and he responded as as below in red text - last para starting with “This is a standard HIA industry contract……….”

How did you resolve this? Did your Bank accept your explanation?

Thanking you in anticipation.

John

we have the same clause in our contract but we got Interim Occupancy Certificate from the builder and we get final after we do driveway and landscaping. Had no trouble from the bank though

Fore2
Thank you for your reply. Comforting to know that it’s not an issue with some Banks at least.
John

Bizzare

My contract states in a few more words than what i've put down here:

The builder must not demand final payment until after the builder has given the owner either:
1. copy of the occupancy permit, if the works requires one
2. in any other case, certificate of final inspection

The driveway and landscaping are not part of the plans provided to the building surveyor so they do not need to be complete for the surveyor to issue a permit.

sifntdaz
Thank you for your reply. Our build is in Sydney. My understanding (and I could be completely wrong) is that councils now require driveways and landscaping submitted as part of the development application to be finished before a Final. Certificate of Occupancy will be issued.

However I am starting to think that in my case the Bank wants something official to say that the built house itself can be properly inhabited (ie. won’t fall down, leak in the rain, plumbing and electricity works ok). Maybe what is needed for the Bank in my case is an independent inspection carried out before final payment to the builder is made.
John

Looks like different rules in VIC. In my case, the bank has sent out an independent valuer at each stage before they will approve a progress payment. Hopefully that suffices for you.

sifntdaz
Thank you for your reply. We’re dealing with the Bank through a mortgage broker so I’m not totally sure what our Bank will do before making progress payments. However it might mean that we need to engage an independent building inspection at each stage of the build to satisfy the Bank that the final product will be properly built.
John