Browse Forums General Discussion 1 May 31, 2023 5:34 pm Hi, I’m about to sign a contract with a builder and in the contract for the default interest rate they put 45% and the late completion damages is $5 per day. If it is blank than it’s 18% which is much lower. And if the late completion damage is blank it is 50 dollars per day. Can I negotiate with the builder to get this update to 18% and 50 dollars a day? Thanks Miki Re: HIA HOME CONTRACT 2May 31, 2023 9:23 pm You can try: the concept of both these provisions is to give a genuine pre-estimate of the loss either party would suffer - how much does it cost them if you pay late, and how much does it cost you if the build runs late. They get slightly twisted, but what you've got there seems a bit extreme. In the end though, if the builder won't budge, you need to be ready to walk away. Re: HIA HOME CONTRACT 3May 31, 2023 10:30 pm Any builder that starts with 45% interest rate and $5 per day LD should be an immediate write-off in my books. But I guess you found that out way too late in the process and you face a decision of wasting time and money already spent or having some faith in the builder who is ready to rip you off on the contract. Re: HIA HOME CONTRACT 4Jun 01, 2023 6:02 am Its good to question these terms as many first timers won't and have been burned. For others, to identify such unfair conditions before spending time and money, one should allways ask the salesperson for a copy of their company's contract template - that has the general and their company specific clauses and data - early in the sales process. If they won't provide this just thank them nicely and tell them this is a non negotiable condition of your engagement and consideration of them. Who is the builder? These terms blatantly display contempt for their customers as well as lack of confidence in their construction process, their quality and their abillity & motivation to complete on time. If you intend to proceed. Ask the nice salesperson to explain and comment on their contract terms. What are the risks, costs and benefits? You should negotiate, however your position at this stage is weak The negotiation starting point for interest rates should be lower than current market rates and the starting point for liquidated damages should be higher than your total financial costs of any delay in handover. Alternatively if you totally omit liquidated damages in the contract then you can claim alll your reasonable and substantiated delay costs. Maybe consider consulting a lawyer? Re: HIA HOME CONTRACT 5Jun 01, 2023 8:04 am Thanks everyone for replying. Luckily I have not signed the contract yet and I only put $500 to get the ball rolling. As I organised the preliminary items like soil testing, engineers, surveys, and etc. . I’ll ask the builder to comment on these items in the contract. The builder also advised that it’s a fixed price contract guarantee but in the special conditions, it noticed any price increase will be passed onto the owner. So I’ll question this too. Re: HIA HOME CONTRACT 7Jun 01, 2023 8:20 am Infinite-Justice Any builder that starts with 45% interest rate and $5 per day LD should be an immediate write-off in my books. But I guess you found that out way too late in the process and you face a decision of wasting time and money already spent or having some faith in the builder who is ready to rip you off on the contract. This 100%. Don't bother negotiating with such builders. Building approvals are now in the basement. Lowest levels in 11 or 12 years from the data released this week. Builders are getting hungry. Any respectable builder would be more than willing to negotiate and not start with such silly terms in the contract, knowing their future works are drying up fast. I'm starting a build now. Found the negotiation and flexibility of the builder to be far more than I expected. Re: HIA HOME CONTRACT 9Jun 01, 2023 2:30 pm Okay so the builder said was pretty flexible and he said he will fix the default interest rate lower (18%) and the late completion as the default $50 per day. He said that he still had to have the special condition for price increase though.this is what he wrote. “ we have not encountered a situation where we had to utilise the price increase special condition. However, it is included in all our contracts as a proactive measure to protect you and every other client we serve. In the unlikely event that pricing does rise, we have structured the special condition to ensure that we only pass on the actual difference in cost without any builder margin. We believe this approach to be fair and reasonable, and our clients thus far have found it to be acceptable.” Re: HIA HOME CONTRACT 10Jun 01, 2023 6:15 pm Suggest considering what your weekly costs of delay would be. Such as interest, rent, storage etc and compare with the weekly rate of liquidated damages that the builder is proposing. Allow for weekends, holidays and rain days etc as well. Your negotiating position is strongest before you sign! There are likely to be ongoing skilled labour shortages across the construction sector and resulting cost inflation effects so i believe costs will increase and there will be delays with contractors. So does the builder. If you accept the 'special condition' make sure the contract clearly documents a requirement for sufficent proof of actual costs, including tax invoices and records of off invoice rebates, trading terms etc. There is smoke and mirrors here! 3rd party verifiable is best. Also check with your broker / bank about such cost escalation terms. The builders initial unfair position indicates their contempt and predeposition for deception, dont trust them. Re: HIA HOME CONTRACT 11Jan 24, 2024 1:16 pm AJ1111 Infinite-Justice Any builder that starts with 45% interest rate and $5 per day LD should be an immediate write-off in my books. But I guess you found that out way too late in the process and you face a decision of wasting time and money already spent or having some faith in the builder who is ready to rip you off on the contract. This 100%. Don't bother negotiating with such builders. Building approvals are now in the basement. Lowest levels in 11 or 12 years from the data released this week. Builders are getting hungry. Any respectable builder would be more than willing to negotiate and not start with such silly terms in the contract, knowing their future works are drying up fast. I'm starting a build now. Found the negotiation and flexibility of the builder to be far more than I expected. Would love to know who your builder is? You talk about deletions, are they variations or PS and PC adjustments? pleas list them 1 17022 Unless there is something in special conditions the builder does not have to give you timeline. If your demolition contractor has not removed Asbestos and it was found… 12 29157 Sorry but you have a crap builder. Probably too late now. For our last build I only spoke to builders who would allow me easy access (at no cost). I used my own sparky… 10 10210 |