Initial Deposit Dispute

Hi Guys,

Need some advice about a scenario I am facing.
I had paid a builder initial deposit (says non refundable) of 2000$ based on there initial quote and inclusions list we discussed verbally.
They then gave me an HIA contract with the same contract price as discussed and even a draft drawing.
However within 2 weeks before I could sign and send the HIA contract they came back saying that they would not be able to build at the same price and are now asking for 15000$ extra for the same inclusions.
This new contract price is above my budget and hence I have asked for my deposit back as it was paid on a verbal agreement of initial contract price.
The builder is not willing to give me a full refund. What can I do in this situation ? No contract is signed yet.

What is the $15k for? Site cost?

The Initial deposit is of 2000$ and they say it is for document preparation and starting the process of getting permits and soil tests. etc

Sorry to hear you are going through this.

I have heard of this happening to a few people up here in Sydney as building prices have gone up substantially this year. For instance timber has almost doubled which affects frames and joinery.

Overall on average prices have increased by over 20% across the board since January.

I know of carpenters who have walked off jobs mid framing and refused to return. It happened to us twice and cost us nearly $70,000 due to the increased timber price.

Having said that, the ethical thing to do would be to refund your deposit, however, if they have paid money for a survey and a soil test they probably cant refund your money, so they best thing for them to do would be to give you the DWG version of the survey and the soil test so you can reuse these with another builder.

Then at least you have something for your money.

All the best

Simeon

They haven't done any soil test or survey !! The only thing they have provided me is an incomplete drawing ( 1 page ) and a HIA contract. No other costing was done from the builder. Is there any legal way I can go to get the deposit back if the builder doesn't act ethically ?

Once you get the soil /geo report add another $20K
then they will draw you in with a further deposit in order to complete the final engineering
the HIA contract allows for cost increases


The courts aren't interested, besides Housing litigation in Australia is only for the rich

If the majority of builder were ethical they would have made the list
Survey trusted professional

OT if that's the builders game plan don't give him anymore money
next time have everything sorted before you get 3 Builders to quote

Sounds like you need some legal advice or consumer advocacy advice. Who or what is the Vic version of NSW Fair trading?

If you have decided not to proceed ask the builder politely in writing for most of your money back based on the promises they made to you a week earlier. They have accepted your money then done or provided almost nothing of value and incurred minimal cost. Give them 5 working days to pay up. Mention that if they wont pay up you will lodge a complaint and claim with your state fair trading authority and share your experience, including building company name (but no peoples names) widely on social media.Give them fair opportunity to do the right thing first.

Thanks for your suggestion . I have already sent them a detailed email asking for full refund and sent up a follow up email as well. I have even offered to split the loss in case they provide me an itemized costs and spending on the project.
They however are not ready to share itemized spending costs and are just saying to take 50% refund which I have not accepted. Will give them few more days to come back before I lodge a complaint at Consumer Affairs Victoria.

Keep all communications in writing in case you need to lodge a complaint. Talk is cheap!

They say extra $15k is for price increase in raw materials and other constructions, they haven't even done any site cost estimation yet. It is strange that $15K increased in 2 weeks and strangest of all there sales person was still not aware of it . I was given a call by the director of the company to say that they can't build the house at the initial contract price !

If the costs increases cannot be substantiated the ACCC calls this particular sales tactic 'baiting' and 'deceptive conduct' which breach the ACL. Unfortunaty its common in the industry.

I asked for the itemized costs for the spending the builder has done until now on the project . Like the HIA contract , draft drawing etc. I understand the prices have gone up in this pandemic time and am not questioning that. It's just that the new contract price is not in my budget and I would not like to proceed.

My builder locked in my base price from the day I paid my deposit, it was last year, since they have had two price increases. But I still pay for last year’s base price. If I were in your situation I wouldn’t be happy. Talk to them to get your money back if they cannot grant their promise.

@Flaminigo - I have tried talking to them for the refund, they want me to take 50% refund which is not acceptable as I have not changed my mind and have honored the initial contract price. I will give few more days for them to get back to me , if they don't is there any legal steps I can take ?

the legal steps will cost you more money than 50% of your deposit.
i'd take as much as you can get out of them, and then complain to wherever you can complain for free.

I was also thinking of the same plan initially , but taking 50% deposit back would then weaken my case as they might say I have agreed to the 50% refund by accepting the amount. Complain for free can be done in ? Consumer affairs Victoria is the only place I know of . Is there anything else ?

I end up paying a lot of more than originally quoted due to site cost, extras etc. but base house price is the same. I think if they have not done soil test and land survey, why is it so hard to get money back, they increased their price and you should have a second chance to make your decision.

Exactly my point !!! How can they charge me 2000$ for sending HIA contract ( that too on the old contract price ) and a one pager drawing document which would be of no use to me when I go to any other builder. No other work has been done from their side apart from this.
Do you think I have a good case if I go to Consumer Victoria or VCAT for this ?

I don’t really know I guess depending how strong you are (mindset). I did ask my builder before I paid my deposit, what if they cannot build after survey and soil test due to whatever the reasons, they told me that they will refund the money they have not used and they never define this amount. I guess the builder you are dealing with is not a mainstream builder in the market or a small company. This looks bad for that company.