Browse Forums Building A New House 1 Mar 02, 2022 9:02 pm Hi there, Has anyone else experienced a COVID Clause in their HIA contracts e.g; if the builder can't get materials in, then this can be a cost increase to me as the buyer. I am building with Sherridon and have been presented with a HIA contract that has a COVID 19 clause in it and I am not agreeing with this clause. Re: HIA Contract COVID Clause 2Mar 03, 2022 12:37 pm Please understand,the soul reason HIA exists is to protect it's builders who pay a membership to HIA,it's completely there for builders and it's contracts makes it much better for builders only, It should illegal to sign a contract without a pre contract inspection. Re: HIA Contract COVID Clause 3Mar 03, 2022 1:15 pm In the current market its unlikely a builder will vary their standatd HIA contract terms. Too risky for them. Most will probably say take it or leave it. At very least you should read and fully understand every clause, all definitions, and the financial implications and other risks for you before you sign up. Consider from the builders perspective they are selling you a contract, not a home Re: HIA Contract COVID Clause 5Mar 03, 2022 2:54 pm i think this is just a further clarification of a similar clause that the builder can charge you for unforseen expenses/costs outside of their control. I suspect the reason there is now a covid specific clause is because at some point one cant keep claiming a pandemic thats been going on for 2.5 years as "unforeseeable" Dark matter scientist, can breathe underwater, mind reader and can freeze matter just by willing it. Trust me, its in my sig. Re: HIA Contract COVID Clause 6Mar 03, 2022 3:14 pm Agree with Noname: it would have been "force majeure" previously, but likely doesn't meet that definition now (same reason airlines could refuse refunds for those who booked travel after COVID hit). Think of the contract as allocating risk: if costs go up due to supply chain failures due to COVID, who should take on that risk? Usually it is allocated to the party that can best control it. If it can't be controlled, it becomes a negotiation. If the builder takes the risk, then they should factor that into their costs, and add a risk margin. If it's you, you shouldn't pay the risk margin, but you pay if it eventuates. Re: HIA Contract COVID Clause 7Mar 03, 2022 3:21 pm SJT76 Agree with Noname: it would have been "force majeure" previously, but likely doesn't meet that definition now (same reason airlines could refuse refunds for those who booked travel after COVID hit). Think of the contract as allocating risk: if costs go up due to supply chain failures due to COVID, who should take on that risk? Usually it is allocated to the party that can best control it. If it can't be controlled, it becomes a negotiation. If the builder takes the risk, then they should factor that into their costs, and add a risk margin. If it's you, you shouldn't pay the risk margin, but you pay if it eventuates. unfortunately most consumers aren't in a position to question or validate the response. A good example is when structural lumbar futures were down after a spike some months prior, the lumber available never recovered in price or availability - why? Dunno. pay or dont have your house built. Dark matter scientist, can breathe underwater, mind reader and can freeze matter just by willing it. Trust me, its in my sig. Re: HIA Contract COVID Clause 10Mar 03, 2022 7:27 pm Danyg Hi there, Has anyone else experienced a COVID Clause in their HIA contracts e.g; if the builder can't get materials in, then this can be a cost increase to me as the buyer. I am building with Sherridon and have been presented with a HIA contract that has a COVID 19 clause in it and I am not agreeing with this clause. Hi Danyg Just reading everyone's very interesting and well informed comments, and wondering if you can post the wording of the clause? Be very interested to see what it covers and doesnt cover cheers Simeon Architectural Homes & Duplexes - specialising in custom designing homes to your budget Get a Free Onsite Consultation Today or send a PM for information, questions or advice. Re: HIA Contract COVID Clause 11Mar 03, 2022 9:13 pm Hi everyone, Thanks so much for your informative replies. This is what is stated; COVID-19 – It is agreed between the parties that the date for practical completion may be extended due to the effects of the COVID-19 pandemic, including but not limited to the following: (a) There may be a delay in supply of materials; (b) There may be restrictions on physical activity on site due to social distancing or other health protection requirements; (c) There may be increased costs of OH&S services and requirements, hazard gear; (d) There may be increased costs of materials, services, tradespeople and other as yet unidentified flow on costs; (e) There may be delay costs to either the Owner and or the Contractor; AND it is agreed that in the case of such circumstances arising before, during and after the period allowed to bring the building works to practical completion either part may give written Notice (the COVID-19 Notice) to the other party in respect to any matter or thing, cost or delay arising out of or in connection with the COVID-19 pandemic, in which case And the parties may reach an agreement (the COVID-19 Agreement), with each agreement being numbered consecutively and being a signed agreement entered into by and between the parties, recorded in writing and dated as at the date of the agreement with each party retaining a copy thereof: And in case of any dispute, it shall be resolved by agreement reached and recorded at the Victorian Domestic Building Dispute Resolution Victoria (DBDRV) service or by order of the Victorian Civil and Administration Tribunal (VCAT). Re: HIA Contract COVID Clause 12Mar 04, 2022 8:39 am That is a poorly drafted clause. NOT LEGAL ADVICE, but: - The introductory wording talks about delays, but the later wording talks about both delays and cost increases. It is not clear to me if cost increases are actually covered by the clause. - This is essentially an "agreement to agree". If you don't agree, it is just outsourced to the dispute process - Not sure why you need a notice after practical completion There are other issues with the drafting too. Re: HIA Contract COVID Clause 13Mar 04, 2022 9:51 am SJT76 That is a poorly drafted clause. NOT LEGAL ADVICE, but: - The introductory wording talks about delays, but the later wording talks about both delays and cost increases. It is not clear to me if cost increases are actually covered by the clause. - This is essentially an "agreement to agree". If you don't agree, it is just outsourced to the dispute process - Not sure why you need a notice after practical completion There are other issues with the drafting too. not overly relevant though. The intent is clear. You can argue a poorly worded clause in a court, but if the intent is clear, then how its worded is usually a poor defense to a claim. Dark matter scientist, can breathe underwater, mind reader and can freeze matter just by willing it. Trust me, its in my sig. Re: HIA Contract COVID Clause 14Mar 04, 2022 9:57 am This is consistent with other clauses in the HIA contract which are patently unfair! It openly displays contempt of HIA member builders towards their customers and cannot bode well for them when the building cycle turns down.
I think the wriiten notice of delays and additional cost should be provided formally in writing at the time its known by the builder or within a very limited time period after the event. With suitable agreed proof documents including true cost increases without margins added and net of supplier rebates & incentives etc. Like HIA procedure for claiming weather delay days, its not appropriate to retrospectively advise COVID related or any other delays and cost variations only at PCI time. The loose way this HIA clause is drafted provides a blank cheque to the builder to find extra claims and allows avoidance of liquidated damages offsets on the final payment. I wonder how the home mortgage providers will percieve this risk transfer / profit grab. Maybe its good for them too? Also builders are very comfortable outsourcing disputes to tribunals, saves them time and labour costs, as well as frustrating customers and adding expert witness and legal expenses. Many just give in. They will actually encourage this! Better to have clear procedures etc. for claims and to resolve disputes together without engaging third parties. Re: HIA Contract COVID Clause 15Mar 04, 2022 12:13 pm Noname SJT76 That is a poorly drafted clause. NOT LEGAL ADVICE, but: - The introductory wording talks about delays, but the later wording talks about both delays and cost increases. It is not clear to me if cost increases are actually covered by the clause. - This is essentially an "agreement to agree". If you don't agree, it is just outsourced to the dispute process - Not sure why you need a notice after practical completion There are other issues with the drafting too. not overly relevant though. The intent is clear. You can argue a poorly worded clause in a court, but if the intent is clear, then how its worded is usually a poor defense to a claim. I have re-read and cannot determine the intent. I believe the intent is to make delays caused by COVID acceptable "the date for practical completion may be extended due to the effects of COVID". However, if that was the intent, there should be a mechanical process to document the delay and get an automatic extension. There is not. Instead, "the parties may reach an agreement". If they don't reach an agreement, then the matter is settled by VCAT or DBDRV. I cannot see that the clause grants right to the builder to an extension of time. There may also be an intent to cover cost increases, but this is less clear. However, "there may be delay costs to either the Owner and or the Contractor". So, if practical completion is delayed due to COVID, as an owner I now have additional costs for my rent and finances - so, should I submit a notice and require the builder to pay liquidated damages to cover these? I am not sure that this clause would be enforceable in any meaningful way. Re: HIA Contract COVID Clause 16Mar 04, 2022 2:28 pm SJT76 Noname SJT76 That is a poorly drafted clause. NOT LEGAL ADVICE, but: - The introductory wording talks about delays, but the later wording talks about both delays and cost increases. It is not clear to me if cost increases are actually covered by the clause. - This is essentially an "agreement to agree". If you don't agree, it is just outsourced to the dispute process - Not sure why you need a notice after practical completion There are other issues with the drafting too. not overly relevant though. The intent is clear. You can argue a poorly worded clause in a court, but if the intent is clear, then how its worded is usually a poor defense to a claim. I have re-read and cannot determine the intent. I believe the intent is to make delays caused by COVID acceptable "the date for practical completion may be extended due to the effects of COVID". However, if that was the intent, there should be a mechanical process to document the delay and get an automatic extension. There is not. Instead, "the parties may reach an agreement". If they don't reach an agreement, then the matter is settled by VCAT or DBDRV. I cannot see that the clause grants right to the builder to an extension of time. There may also be an intent to cover cost increases, but this is less clear. However, "there may be delay costs to either the Owner and or the Contractor". So, if practical completion is delayed due to COVID, as an owner I now have additional costs for my rent and finances - so, should I submit a notice and require the builder to pay liquidated damages to cover these? I am not sure that this clause would be enforceable in any meaningful way. the reasonable person test applies. the intent is clear. You cant really look at that as a reasonable person and say "duh, i don't get it". it boils down to that you're up for extra costs for any material price increases caused by covid and cant claim damages for delays that are caused by covid. you can argue with the builder if you like, but your not going to get anywhere i guarantee. Dark matter scientist, can breathe underwater, mind reader and can freeze matter just by willing it. Trust me, its in my sig. Re: HIA Contract COVID Clause 17Mar 04, 2022 2:37 pm Its all about shifting the financial risks to you rather than raising their prices to insure against it which affects sales. Would be based on forecasts of HIAs ecomomists and will include all Non-COVID specific increases as well. Just accept and budget for an extra 20% or so. Re: HIA Contract COVID Clause 19Mar 05, 2022 11:07 am Danyg Thanks for all the help and advice. I have paid $4000 to have my plans and contract drawn up and I am concerned that all builders will have this in their contracts now. Is it worth losing the $4000? Only you can determine that really. We walked away from our first builder after paying the initial deposit because it was a bad gut feeling. Losing the few thousand dollars wasn't ideal, but we could afford to, and it just wasn't worth the stress of continuing with them. I agree with previous comments that the wording of the clause is ambiguous. Our contract doesn't have anything like this in it. There's the usual about the builder being able to have an extension of time due to unforeseen circumstances, but nothing about covid specifically. We had a locked in fixed price though, so that could be a contributor. Re: HIA Contract COVID Clause 20Mar 05, 2022 11:54 am mcbks Our contract doesn't have anything like this in it. There's the usual about the builder being able to have an extension of time due to unforeseen circumstances, but nothing about covid specifically. We had a locked in fixed price though, so that could be a contributor. Look closer. It may not say covid, but there are clauses there that incude up to a 5% increase in contract value for unforseen increases in materials costs too. This can apply to fixed price contract regardless of fixed price. Dark matter scientist, can breathe underwater, mind reader and can freeze matter just by willing it. Trust me, its in my sig. 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 28691 You talk about deletions, are they variations or PS and PC adjustments? pleas list them 1 16542 10 12255 |