Hi Everyone,
I am sharing my experience with Providence Homes (a small-scale builder) based in the Western suburb of Melbourne, Victoria, and seeking advice.
In December 2020, I signed a building contract for a 26sq single dwellings for $284,000 with a completion time of 395 days. It was a basic build with four beds, two living, and a driveway.
We couldn't start building until July 2021 due to some financing issues. While I was dealing with home financing issues, I received an email from Providence Homes stating a severe timber shortage and mentioning that the company had decided to use steel frames for my job
No variation costs were mentioned in the email, so I called the sales office and inquired about cost variations in my contract. I was assured by the sales team that there is no extra cost for this variation; if there were, it would have been mentioned in the email. I was relaxed and waited for the building work to commence.
In August 2021, my finances were sorted, and the builder was given a green signal for building permits which were issued in October 2021, and the slab was poured in November 2021.
During the build, most of the communication was done over phone calls or text messages. I was doing the same because it was good so far, and there were no significant hiccups. I received the progress payment invoice stage by stage and paid the builder accordingly without delays.
In May 2022, I received a fixing stage invoice from the builder. I was out of town, so I asked him via email if this stage was complete, and he replied that everything else was done apart from a few things. I called the builder to inquire why he demanded money when the stage was not complete. He started to make excuses by saying he's facing cash flow issues and gave example of Metricon facing similar problems and assured me that the material has been ordered. Still, it should all be in by two weeks, and requested me to release the payment; otherwise, there will be delays. I trusted this guy and made the payment for the fixing stage.
Two weeks after he received the payment, he sent me an invoice of 19k for cost variations for Frame, plaster, electrical, and plumbing.
I called him to question the new invoice, but this time he was rude and aggressive. He started blackmailing me that if I didn't pay him the variation invoice, he would stop working on my house, and this would cause delays.
I decided to check how much work was done in my absence and was shocked to see that plaster and kitchen cabinets were in and nothing else. There was a lot to be done which I already paid him.
I was convinced I should use legal help and respond to him accordingly; therefore, I went to see a construction solicitor. After looking at my building agreement and recent invoice advised me not to pay anything to this builder; instead, he will send a legal notice in response to this invoice. Solicitor also suggested that one of two things will happen after he sends notice to the builder. He will take this seriously and finish the build or have to take him to VCAT. The Solicitor also suggests that if we don't want to go VCAT and complete the building without dispute, then negotiate with the builder and offer him a little towards this invoice as the legal path will take time and cost us money.
My father, who was there, suggested that he will talk to the builder and try to negotiate and stopped me from taking legal action at this stage. My father arranged a meeting, and the builder agreed to take $10k to finish the job. But he insisted that he would need half of it in advance. We questioned how long it would take to complete the remaining build, and he replied one month, to which we offered him two fortnightly payments, but he must finish the remaining job in one month.
On 2nd August 2022, The builder started the paint job on my house, and we, as agreed, paid him $5k at the end of the first fortnight. It took him well over a month to finish the paint job which was late as per his commitment. Therefore I did not pay him the 2nd $5k installment and waited for him to finish the house. In the 3rd week of September 2022, the builder called and demanded the remaining $5k, on which I reminded him that the agreement was to finish the house in one month, which did not happen; however, I'll pay you the remaining amount of $5k on the day of final inspection. After hearing this builder went quiet and did not do any work on my house. On 30th September 2022, when he contacted me on what's app and demanded the money again, he threatened me that if I didn't pay him by Monday, he would issue me with a work stop notice and suspend the building until funds were clear. I once again reminded him that funds of $5k will be paid no earlier than the final inspection.
Soon after this he email me work stop notice stating;
“Delay caused by owner (according to schedule 1 12. Agreed delay damages per week) and said 18 weeks will be extended in your total building period.”
And charged $5400 for this invoice with Due date of 07 Oct 2022.
Please help if anyone else has had a similar problem with their builder.
What is most likely to happen if I go to legal assistance? (VCAT)
Thanks