If you are using a builder who you've got a relatively good relationship with, would you take issue with them requesting progress claims say a few days in advance? Seemingly for efficiency purposes (our bank was extremely slow paying their deposit).
Browse Forums General Discussion 1 Sep 21, 2015 9:12 am If you are using a builder who you've got a relatively good relationship with, would you take issue with them requesting progress claims say a few days in advance? Seemingly for efficiency purposes (our bank was extremely slow paying their deposit). Re: Progress stage claims 2Sep 21, 2015 9:45 am In God we trust. . . . everybody else gets paid according to the contract. The Harder You Try - the Luckier You Get ! Web site http://www.anewhouse.com.au Informative, Amusing, and Opinionated Blog - Over 600 posts on all aspects of building a new house. Re: Progress stage claims 3Sep 21, 2015 9:45 am Leksie5000 If you are using a builder who you've got a relatively good relationship with, would you take issue with them requesting progress claims say a few days in advance? Seemingly for efficiency purposes (our bank was extremely slow paying their deposit). You should be asking the bank that, they might see it as fr@ud at worse. Why 1. You don't own your house until you have paid it off 2. If the Builder has cash flow problems that is his fault 3. If you pay in advance what guarantee do you have the work will be completed? 4. What happens if a dispute arises and the relationship sours? 5.6.etc Designer,Engineer (Civil,Const & Envir),Builder,Concrete & Masonry Contract.Struct Repairs Progress stage claims 4Sep 21, 2015 10:09 am Yes all valid points, I'm not sure if that's the case - I doubt it as they are known to be reputable but who knows. I am talking a delay of a day or two. Eg by the time they receive the payment it will be completed. I'm still not so comfortable with that though... Re: Progress stage claims 5Sep 21, 2015 10:25 am most volume builders invoice you in advance of the stages being complete. some a couple days, some before the stage is even started. I would use your common sense e.g. is the invoice for a stage that is 95% complete and will be finished shortly? if so, I dont see a major issue. If it is for a stage not even begun, I would not pay it irrespective of who the builder is. Just remember that if you pay earlier than you have to, you're paying interest that you shouldn't need to. Creator of superduperonium, expert at expert things, nobel laureate, can hold my breath for 10 minutes. Re: Progress stage claims 6Sep 21, 2015 10:52 am Yeah that's right it's 95% complete and will be done in the next few days. Re: Progress stage claims 7Sep 21, 2015 12:51 pm Hi Leksie, If you have opted for method 2 payment under schedule 3, the builder "may" submit his progress claim although the stage is not technically reached. For example, under this method of payment although a bricklayer may not be complete, the builder may submit his progress claim for lock up if plaster is complete. The theory is that the builder has conducted works totaling or equal to the lock up claim. We would always recommend method 1 to be used. If you were to use method 2, we strongly recommend someone experienced to confirm the equivalent value of works are complete. regards CR Partners Re: Progress stage claims 8Sep 21, 2015 12:53 pm When releasing progress payments, don't you have to sign off the progress payment document for the bank ensuring that all work have been completed etc? Aren't you "not telling the truth"(the forum doesn't allow me to use the word "ly ing") then if it's not? Can you get "sued" by the bank if they found out? Progress stage claims 9Sep 21, 2015 1:01 pm CR Partners Hi Leksie, If you have opted for method 2 payment under schedule 3, the builder "may" submit his progress claim although the stage is not technically reached. For example, under this method of payment although a bricklayer may not be complete, the builder may submit his progress claim for lock up if plaster is complete. The theory is that the builder has conducted works totaling or equal to the lock up claim. We would always recommend method 1 to be used. If you were to use method 2, we strongly recommend someone experienced to confirm the equivalent value of works are complete. regards CR Partners Thanks for your reply Are you referring to a HIA contract? We have a master builder contract. I could check the contract and the lawyer in me is tempted, I guess I'm really asking from the perspective of balancing conservatism with maintaining relationship with your builder. Re: Progress stage claims 10Sep 21, 2015 1:02 pm One consideration is the progress payments realistic. . . many builders try to 'Front End Load' contracts by putting unrealistic values on the early payments. (see this link for an explanantion. .http://www.anewhouse.com.au/2012/01/how ... yments-be/) The Harder You Try - the Luckier You Get ! Web site http://www.anewhouse.com.au Informative, Amusing, and Opinionated Blog - Over 600 posts on all aspects of building a new house. Re: Progress stage claims 11Sep 21, 2015 1:35 pm bashworth One consideration is are the progress payments realistic. . . many builders try to 'Front End Load' contracts by putting unrealistic values on the early payments. (see this link for an explanantion. .http://www.anewhouse.com.au/2012/01/how ... yments-be/) Yep realistic and balanced Re: Progress stage claims 12Sep 21, 2015 3:06 pm mwccl When releasing progress payments, don't you have to sign off the progress payment document for the bank ensuring that all work have been completed etc? Aren't you "not telling the truth"(the forum doesn't allow me to use the word "ly ing") then if it's not? Can you get "sued" by the bank if they found out? 1. As far as you, the owner, with no experience in building, knows, the invoice means the stage must be complete, otherwise why would you be billed for it? Its not like youre a building expert that knows when the stage is complete. Thats not the same as not telling the truth. 2. What would the bank sue you for? Are you obtaining any gain from the so called deception? The bank couldn't care less. They're making money from you the moment you draw down. faster you draw down, the more interest the bank earns quicker. They will only go and inspect before settlement to make sure that the end result is a saleable asset. 3. the purpose of you signing the progress payment claim is so that the builder doesn't have full access to your construction loan themselves. There is an assumption that an owner will be highly motivated to ensure they are not paying for works not complete as to avoid being stuck paying exorbitant interest or being ripped off. Creator of superduperonium, expert at expert things, nobel laureate, can hold my breath for 10 minutes. Re: Progress stage claims 13Sep 21, 2015 3:10 pm Leksie5000 bashworth One consideration is are the progress payments realistic. . . many builders try to 'Front End Load' contracts by putting unrealistic values on the early payments. (see this link for an explanantion. .http://www.anewhouse.com.au/2012/01/how ... yments-be/) Yep realistic and balanced Yeah i wouldn't be to worried about it. Although if there are items still outstanding from an independent inspectors report, I'd use that as leverage. Even though you likely contractually have no right, the builders get right on to it. Creator of superduperonium, expert at expert things, nobel laureate, can hold my breath for 10 minutes. Re: Progress stage claims 14Sep 21, 2015 4:05 pm Ponzu 1. As far as you, the owner, with no experience in building, knows, the invoice means the stage must be complete, otherwise why would you be billed for it? Its not like youre a building expert that knows when the stage is complete. Thats not the same as not telling the truth. Well, in this case, the owner does know it is incomplete. In my case, I wouldn't know if the builder has told me the right thing which is where my building inspector comes in and hopefully the building inspector can "expertly" verify that this is the case. Ponzu 2. What would the bank sue you for? Are you obtaining any gain from the so called deception? The bank couldn't care less. They're making money from you the moment you draw down. faster you draw down, the more interest the bank earns quicker. They will only go and inspect before settlement to make sure that the end result is a saleable asset. It could be a case of a fr@ud happening? Which is why on my progress payment slip, the bank do say that they might come onsite to check the work done with respect to the stage but not the quality or standard of it. Ponzu 3. the purpose of you signing the progress payment claim is so that the builder doesn't have full access to your construction loan themselves. There is an assumption that an owner will be highly motivated to ensure they are not paying for works not complete as to avoid being stuck paying exorbitant interest or being ripped off. The bottom line is you are signing it off knowing that it is incomplete. I am not sure if it is a normal practice but I wouldn't personally do the same. Re: Progress stage claims 16Sep 21, 2015 4:20 pm Hi Leskie, Schedule 3 refers to the HIA contract. If you are using the MBA contract, then this is noted in section 23. This may also refer to "builder's special conditions" noted in the tender document. regards, CR Partners Re: Progress stage claims 17Sep 21, 2015 4:52 pm mwccl Ponzu 1. As far as you, the owner, with no experience in building, knows, the invoice means the stage must be complete, otherwise why would you be billed for it? Its not like youre a building expert that knows when the stage is complete. Thats not the same as not telling the truth. Well, in this case, the owner does know it is incomplete. In my case, I wouldn't know if the builder has told me the right thing which is where my building inspector comes in and hopefully the building inspector can "expertly" verify that this is the case. Ponzu 2. What would the bank sue you for? Are you obtaining any gain from the so called deception? The bank couldn't care less. They're making money from you the moment you draw down. faster you draw down, the more interest the bank earns quicker. They will only go and inspect before settlement to make sure that the end result is a saleable asset. It could be a case of a fr@ud happening? Which is why on my progress payment slip, the bank do say that they might come onsite to check the work done with respect to the stage but not the quality or standard of it. Ponzu 3. the purpose of you signing the progress payment claim is so that the builder doesn't have full access to your construction loan themselves. There is an assumption that an owner will be highly motivated to ensure they are not paying for works not complete as to avoid being stuck paying exorbitant interest or being ripped off. The bottom line is you are signing it off knowing that it is incomplete. I am not sure if it is a normal practice but I wouldn't personally do the same. my original first point speaks to the average joe, not this owner. second point - Fr@ud is a wrongful or criminal deception intended to result in financial or personal gain. So please explain to me how an individual who is in the hole to a bank gains an advantage by paying the builder early? There is no conceivable scenario where the bank could sue the loan holder for paying a builder an invoice early as the loan holder is not receiving any gain or advantage by doing so, bar one where the loan holder is in cahoots with the builder - but who in their right mind would screw them selves in that way? In the builders case, if the builder was perpetrating the fr@ud, then the bank could potentially sue them, but again, not the loan holder. The clause for inspection is there so that the bank can if they want to. They routinely do so before the final payment is made, at that point over 90% of the loan has already been drawn down and the builder could have made away with it. But again the question is what would the bank sue the loan holder for, after authorising invoices for payment early? third point - you may not have a choice actually, depending on your contracts. Some contracts stipulate a period of 2 weeks for settlment. What if youre issued at 90% complete and then the builder is hampered by weather for 2 weeks in completing the remaining 10%. You could be in breach of your contract for not making the payment. You'll find that the whole process is quite messy and legal at the same time. Only common sense prevails and a good, non confrontational discussion with the builders admin usually gets the issues sorted out around payment times. I paid all my invoices on request bar one, which i paid 4 weeks later. An the reason for this one was my own reasoning which i negotiate with teh builder - I had pointed out to them if i held off, on the most recent one, I would save about 1k in interest due to how the payments were cycling with the bank. they were more than happy to accommodate my final 2 payments to be authorised at the same time. Creator of superduperonium, expert at expert things, nobel laureate, can hold my breath for 10 minutes. Re: Progress stage claims 18Sep 21, 2015 4:56 pm that said ive also seen builders not invoice at all until lock up is completed and you end up with three invoices. Creator of superduperonium, expert at expert things, nobel laureate, can hold my breath for 10 minutes. Re: Progress stage claims 19Sep 21, 2015 5:57 pm CR Partners Hi Leskie, Schedule 3 refers to the HIA contract. If you are using the MBA contract, then this is noted in section 23. This may also refer to "builder's special conditions" noted in the tender document. regards, CR Partners Yes, we allowed for no special conditions. Thanks. 8 6138 5 6813 Not unless you have managed to put it as a special condition into the contract somehow. 1 6155 |