Browse Forums General Discussion 1 Mar 25, 2020 7:03 am Hi guys, We have been talking to our builder for a few months now to lock away a medium /large size renovation, we have reached a point where all we need to do is sign the HIA building contract and the building permit is issued and we can start works The builder is using someone else's building licence, as his licence isn't being issued for another month of so, but we have known the builder for 30yrs, so we know the type of person and quality of work. We are incredibly nervous signing this contract, so we have a few questions: - under current economic conditions, are there any special conditions we should definitely include to protect us ? - the time frame he promised us originally was 15 weeks. now he is asking 20 weeks ( includes 14 days of bad weather). he said he wanted extra time due to current COVID-19 situation - We feel there is a lot of provisional sums (electrical / plumping for roof and drainage /excavation footings/ concrete slab works) is this normal? - what are reasonable penalties can we include? if the project goes beyond the time frame. I'm a very hands on owner and have been able to buy a lot of items, fixtures / floorboards/ carpet ....... to save costs. I asked him if i could continue to do this during the build but he said it will get confusing. Im looking for any advise to make my wife and i feel more comfortable, any help will be welcomed. thank you Re: Advice / Help - Building Contract 2Mar 25, 2020 9:37 am nick79 what is the liquidated damages amount payable per week if your builder goes beyond the promised 20 weeks? This should reflect your actual costs of delay, not a token amount. It should not be considered a penalty for the builder, just realistic compensation to protect you financially. Check also the force majure clause as to how it treats covid19 as further delays are possible with so much uncertainty now. The agreed 20 weeks could be meaningless in the current environment. There is high risk right now but we need all business to continue as much as possible. Make sure you identify and understand all the financial risks before signing the contract. Ideally sharing them in a fair and balanced way with your builder. Re: Advice / Help - Building Contract 3Mar 25, 2020 10:39 am Norfolk @nick79 what is the liquidated damages amount payable per week if your builder goes beyond the promised 20 weeks? This should reflect your actual costs of delay, not a token amount. It should not be considered a penalty for the builder, just realistic compensation to protect you financially. Check also the force majure clause as to how it treats covid19 as further delays are possible with so much uncertainty now. The agreed 20 weeks could be meaningless in the current environment. There is high risk right now but we need all business to continue as much as possible. Make sure you identify and understand all the financial risks before signing the contract. Ideally sharing them in a fair and balanced way with your builder. this is great insight, really appreciate it. liquidated damages amount payable per week, has not been discussed yet. good point. So when you say "should reflect your actual costs of delay, not a token amount" what do you mean by this? Re: Advice / Help - Building Contract 4Mar 25, 2020 10:51 am Yours is a renovation so may be different. For a new build or knock down rebuild.a delay can cost your rent (payment or receipts), mortgage interest payments, storage costs etc. depending on the house and location this could easily be up to $1,500 a week. Many HIA contracts offer token amounts of liquidated damages at about $150 per week. Therefore you bear the financial risk of delays, as well as The inconvenience and emotional distress. The builder has no ‘skin in the game’. Re: Advice / Help - Building Contract 5Mar 25, 2020 11:11 am Norfolk Yours is a renovation so may be different. For a new build or knock down rebuild.a delay can cost your rent (payment or receipts), mortgage interest payments, storage costs etc. depending on the house and location this could easily be up to $1,500 a week. Many HIA contracts offer token amounts of liquidated damages at about $150 per week. Therefore you bear the financial risk of delays, as well as The inconvenience and emotional distress. The builder has no ‘skin in the game’. awesome thank you for explain this extremely thoroughly. Also, we have 9 progress payments with 7 days to pay, how deep should each phase be explained in the contract? - Should the builder be calling out the exact material he is using? we are worried he will use cheap materials to cut costs. Is it normal for the client to approve materials before its used? Re: Advice / Help - Building Contract 6Mar 25, 2020 11:45 am You can amend the HIA contract and plans and put as much detail in as necessary for progress payments terms and materials specifications. Take your time and discuss this with the builder to have mutual agreement then document all this in the contract amendments and plans. Don’t sign anything until you are comfortable. If the builder is not considerate of your needs look elsewhere. Consider the primary purpose of a ‘standard’ HIA contract is to protect the builder financially transferring risk to the customer. Be critical of provisional sums. Particularly for item costs that should now be known from proper planning, like frame, roof, plumbing & electrical. Re: Advice / Help - Building Contract 7Mar 26, 2020 8:12 am your comments have been extremely helpful thank you very much... you have brought to the surface a lot of points that have made perfect sense. We are alot more confident to have a hard discussion with the potential builder. There is a good chance we will have to go start the whole finding a new build process all over again. its extremely stressful but we just don't feel comfortable at the moment Re: Advice / Help - Building Contract 8Mar 28, 2020 10:53 pm Quote: - under current economic conditions, are there any special conditions we should definitely include to protect us ? We built our house through a large builder. Our contract had one ‘No Price Increase’ guarantee for X months. Ours was progressive payment. Can’t remember if it was the pre-purchase agreement or the actual contract. We had 8 weeks to raise any defects, which the builder will review and repair free of charge. Could be longer though. - the time frame he promised us originally was 15 weeks. now he is asking 20 weeks ( includes 14 days of bad weather). he said he wanted extra time due to current COVID-19 situation Bad weather delays is common. Many standard contract doesn’t cover pandemics or act of god. Did you consider to do the renovation after COVID19? - We feel there is a lot of provisional sums (electrical / plumping for roof and drainage /excavation footings/ concrete slab works) is this normal? My builder (large size building company) had fixed lump sum $ of items required for the building (structure) and the build (labour). Eg, colour bond roof, sarking, insolation materials, concrete slab, bricks, pluming, windows on the plan, labour cost, frame, paint, walls, etc. May charge extra for site cost, such as hitting large rocks etc. But non structural items all had individual pricing. Eg, switches, tiles, mirrors, floors, cabinets, bench tops, shelving, taps, door handles, water tank, etc. - what are reasonable penalties can we include? if the project goes beyond the time frame. Our builder included fixed $ amount compensations if they go past the handover date. It doesn’t really cover the rent or mortgage though. We got our house 2 months earlier. It was sitting there closed for 1 month waiting for flooring, otherwise it’d be even earlier. - I'm a very hands on owner and have been able to buy a lot of items, fixtures / floorboards/ carpet ....... to save costs. I asked him if i could continue to do this during the build but he said it will get confusing. My builder didn’t allow any flexibility like this for safety reasons, liability concerns and avoiding confusions, as they need to sign off on the build and provide warranties. One of the other smaller builders we spoke to advise that they can deduct the cost of the tap from the build, if we have our own. But we need to ensure the quality of the fixtures and fittings. Please see my comment above. Re: Advice / Help - Building Contract 9Apr 12, 2020 12:24 am I'm not sure what state your in but in WA its illegal to use someone else's building license, they come down on the builder very hard. I would tread with caution. See what your states regulations are. Re: Advice / Help - Building Contract 10Apr 12, 2020 8:29 am I think you are asking for trouble. Doozer1905 is right. If you have known the builder for 30 years why is there no licence? Maybe it was cancelled for misconduct. In any case licence borrowing is illegal anywhere and also in Victoria. If the builder is prepared to act illegally before you sign the contract what honesty do you expect during your build? Without builder's registration your builder cannot get HOW insurance and without insurance there is no building permit. Reputation means nothing. You are only as good as your last job. Make your enquiries. Good builder is more than just good work, its also running a good business and ticking all the boxes. "Good builder may not have financial stability to complete the job. Cashflow from your job may just prolong inevitable if there is already insolvency. What if your house is nearly finished and it burns down and builder has no contract works insurance and your loan is drawn down? Your pre contract review is the most important inspection. Get experienced building consultant to assist you Foremost Building Expert in Australia,assisting with building problems/disputes, building stage inspections,pre-contract review advice for peace of mind 200 blogs http://www.buildingexpert.net.au/blog You talk about deletions, are they variations or PS and PC adjustments? pleas list them 1 16569 There is no reason why building contract reconciliation cannot be done prior to handover, if the builder won't do it get someone to do it for you. Why would you pay for… 3 6690 I've decided, after a period of confusion (my building broker told me it's probably not worth it to use a lawyer, but others have said it is a must) that I definitely will… 7 27958 |