Browse Forums General Discussion 1 Jun 19, 2010 11:48 am Hi Just wondered how peoples banks paid your builder. We got prep approval for a loan To get approval we needed a signed fixed price contract We signed a contract with a builder The bank is covering about 80%. We have paid deposit and progress 2 and now the bank money is needed for the rest. The bank says The bank loan requires the bank to assess progress ie with a QS or independant builder or estimator I assume and the builder is to submit his claim to the bank. The assessor goes out and checks out whats done and pays the builder an amount relating to the level of completed work. The builder says that he wants his fixed % total amount as per the signed contract. This appears to be top heavy ie he gets 50% contract when only 30% has actually been done in reality. (ie hes clearly trying to get his profit out early on ). A frienf told us this was very common. Is this situation common and what have others done . we want to keep on good terms with the builder rather than playing hard ball and getting legal advice etc because hes been good until now Mike 2/3 of the way thru the build Re: Progress Payment dispute 2Jun 19, 2010 12:04 pm Hi Mike, My 2cents.. Within my contract, it is clearly stated how much are to be paid to the builder (in terms of % and $$ amount) at which stage of the build. (e.g. my next payment of 25% is due when all bricks, roof tiles and gutters/fascia are complete) Alike my previous progress payments, the builder sends me the claim request and I send it to the bank with my approval that the work has been completed. You of course can have an independent inspector do you a report prior to approving it of course. The bank basically acts on my instructions and pay the claim as stated in the contract. Anything outside of the contract amount (variations) are for you to pay. Ultimately, the bank needs to pay the amount as stated in the contract at each stage. The bank loan is for you so it only makes sense you ensure the work is properly done, it is in your best interest and your responsibility to check the work is done properly as basically the bank shouldn't really care as you're ultimately paying the mortgage. As for the top heavy payments, I'm afraid that's the norm, I've paid nearly 50% when I consider only 20% of the house being completed. I believe my bank only sends out an inspector on the final payment. Hope this helps, and yes, keep the relationship with the builder on good terms jim Re: Progress Payment dispute 3Jun 19, 2010 6:07 pm Did you get final approval from the Bank? You should have received a letter of offer from them stating what terms the loan was approved on and what the procedure was re the progress claims. I am of course assuming that their final approval came after you had given them a copy of the contract from the builder and that all this was finalised prior to the build starting. You need to check what their letter of offer states re the progress claims. The builder is quite correct in demanding whatever payments are stipulated in the contract. If the bank was not happy with this they should have negotiated these payments prior to final approval for the loan being given. FYI my bank (Commonwealth) only did an inspection at the end of the build but did only contribute a small amount to the second last payment and the last payment in full. Not sure if this would vary dependent on how much was being borrowed. Re: Progress Payment dispute 4Jun 20, 2010 9:34 pm Its quite common in NSW for Builders to get front end loaded payments as the NSW Govt will not legislate to bring the progress payment maximums in liune with Victorian and Queensland builder contracts. Its not unusual for 'some Builders" to obtain 50-55% of the total contract amount at Frame stage. The best protection is to ensure you have home warranty insurance (non completion cover) and to ensure that the latter stages from Lock up and beyond run on time. If they start to slip in terms of time use the contract liquidated damages notification asap and notify the Home warranty insurer and the Office of fair trading. nothing to do with salespeole. you'd do well to read and ccomprehend the post before bashing away at the keys with some negative comment again. 4 5048 yes it does, you've just not understood it. theres a difference. 4 2776 regardless, your contract stipulates a payments schedule and SOPA doesn't give provision to that scenario. Your contractual terms appear to stand. Hence get a lawyer, it… 4 8949 |