Builder suspended construction, demanding cost increase

Ben126 · Aug 09, 2023 9:52 pm

Hi there,

I am at the stage I don't know what to do next and could really use your advice on legalities, dispute and protection of my own right.

My builder completed the slab stage at the end of May and never replied my follow ups since then. Last week they called me and asking for $40k more though I have already paid a cost variation of $50k before construction commencement. We have signed a cost variation deed and it was agreed there should not be any further price increase.

Placing the construction on suspension and holding us at ransom to pay these unsigned and never agreed for variation costs is shocking and I would like to know if he has breached his contractual obligations by doing so.

What can I do to protect myself? Is builder in breach of any obligation to suspend the construction and ask for more money?

Ashington Homes · Aug 10, 2023 3:41 am

Ben126

Hi there,

I am at the stage I don't know what to do next and could really use your advice on legalities, dispute and protection of my own right.

My builder completed the slab stage at the end of May and never replied my follow ups since then. Last week they called me and asking for $40k more though I have already paid a cost variation of $50k before construction commencement. We have signed a cost variation deed and it was agreed there should not be any further price increase.

Placing the construction on suspension and holding us at ransom to pay these unsigned and never agreed for variation costs is shocking and I would like to know if he has breached his contractual obligations by doing so.

What can I do to protect myself? Is builder in breach of any obligation to suspend the construction and ask for more money?

Hi Ben,

Sorry to hear you are having issues.

It is going to be really hard for anyone in this forum to give you good advice without first reading your contract and providing a little more detail about what the builder is seeking a variation for.

There are so many different versions of contracts out there with special conditions written by builders to suit them. Your contract may have a special condition that allows this, or not.

The best advice is go see a construction lawyer ASAP. I would be happy to recommend one who works in both Sydney & Melbourne if you like, alternatively google "construction lawyer"

Typically though, it is normal practice that variations need to be agreed by both parties before the work is undertaken unless it's something super urgent. Think back to a rental situation where you have to call the managing agent to get most things fixed unless you have a pipe burst in the middle of the night and then you can call your own plumber ( I hope that made sense!).

Another scenario where you may be up for a legitimate variation is for latent conditions. This is where the builder finds something on site that they couldn't have known about when pricing your home. This could include things such as buried asbestos, underground tanks and the like, or perhaps they had to excavate rock which is generally excluded from most contracts.

Let us know how you get on

Cheers

Simeon

Ben126 · Aug 10, 2023 11:51 am

Ashington Homes

Ben126

Hi there,

I am at the stage I don't know what to do next and could really use your advice on legalities, dispute and protection of my own right.

My builder completed the slab stage at the end of May and never replied my follow ups since then. Last week they called me and asking for $40k more though I have already paid a cost variation of $50k before construction commencement. We have signed a cost variation deed and it was agreed there should not be any further price increase.

Placing the construction on suspension and holding us at ransom to pay these unsigned and never agreed for variation costs is shocking and I would like to know if he has breached his contractual obligations by doing so.

What can I do to protect myself? Is builder in breach of any obligation to suspend the construction and ask for more money?

Hi Ben,

Sorry to hear you are having issues.

It is going to be really hard for anyone in this forum to give you good advice without first reading your contract and providing a little more detail about what the builder is seeking a variation for.

There are so many different versions of contracts out there with special conditions written by builders to suit them. Your contract may have a special condition that allows this, or not.

The best advice is go see a construction lawyer ASAP. I would be happy to recommend one who works in both Sydney & Melbourne if you like, alternatively google "construction lawyer"

Typically though, it is normal practice that variations need to be agreed by both parties before the work is undertaken unless it's something super urgent. Think back to a rental situation where you have to call the managing agent to get most things fixed unless you have a pipe burst in the middle of the night and then you can call your own plumber ( I hope that made sense!).

Another scenario where you may be up for a legitimate variation is for latent conditions. This is where the builder finds something on site that they couldn't have known about when pricing your home. This could include things such as buried asbestos, underground tanks and the like, or perhaps they had to excavate rock which is generally excluded from most contracts.

Let us know how you get on

Cheers

Simeon

Hi Simeon,

Really appreciate your response in this. The reason builder demanded for variation again is material price increase. They claim that their supplier wouldn't provide them frame unless they pay more. However it was agreed in the cost variation deed we signed before no further price variation is allow if I paid the previous $50k. Builder didn't even send me email to demand the variation because they know they are in breach of the contract. They called me pretending to be pathetic and said they would lose about 80,000 dollars if they finished building at the current price.

I know I am in a dilemma so probably should seek advice from construction lawyer. Would you please share one who is experience in dispute?

Thanks,

Ben

Ashington Homes · Aug 10, 2023 11:53 am

Ben126

Ashington Homes

Ben126

Hi there,

I am at the stage I don't know what to do next and could really use your advice on legalities, dispute and protection of my own right.

My builder completed the slab stage at the end of May and never replied my follow ups since then. Last week they called me and asking for $40k more though I have already paid a cost variation of $50k before construction commencement. We have signed a cost variation deed and it was agreed there should not be any further price increase.

Placing the construction on suspension and holding us at ransom to pay these unsigned and never agreed for variation costs is shocking and I would like to know if he has breached his contractual obligations by doing so.

What can I do to protect myself? Is builder in breach of any obligation to suspend the construction and ask for more money?

Hi Ben,

Sorry to hear you are having issues.

It is going to be really hard for anyone in this forum to give you good advice without first reading your contract and providing a little more detail about what the builder is seeking a variation for.

There are so many different versions of contracts out there with special conditions written by builders to suit them. Your contract may have a special condition that allows this, or not.

The best advice is go see a construction lawyer ASAP. I would be happy to recommend one who works in both Sydney & Melbourne if you like, alternatively google "construction lawyer"

Typically though, it is normal practice that variations need to be agreed by both parties before the work is undertaken unless it's something super urgent. Think back to a rental situation where you have to call the managing agent to get most things fixed unless you have a pipe burst in the middle of the night and then you can call your own plumber ( I hope that made sense!).

Another scenario where you may be up for a legitimate variation is for latent conditions. This is where the builder finds something on site that they couldn't have known about when pricing your home. This could include things such as buried asbestos, underground tanks and the like, or perhaps they had to excavate rock which is generally excluded from most contracts.

Let us know how you get on

Cheers

Simeon

Hi Simeon,

Really appreciate your response in this. The reason builder demanded for variation again is material price increase. They claim that their supplier wouldn't provide them frame unless they pay more. However it was agreed in the cost variation deed we signed before no further price variation is allow if I paid the previous $50k. Builder didn't even send me email to demand the variation because they know they are in breach of the contract. They called me pretending to be pathetic and said they would lose about 80,000 dollars if they finished building at the current price.

I know I am in a dilemma so probably should seek advice from construction lawyer. Would you please share one who is experience in dispute?

Thanks,

Ben

Ben

What city are you located in?

cheers

Simeon

Ben126 · Aug 10, 2023 11:54 am

Ashington Homes

Ben126

Hi there,

I am at the stage I don't know what to do next and could really use your advice on legalities, dispute and protection of my own right.

My builder completed the slab stage at the end of May and never replied my follow ups since then. Last week they called me and asking for $40k more though I have already paid a cost variation of $50k before construction commencement. We have signed a cost variation deed and it was agreed there should not be any further price increase.

Placing the construction on suspension and holding us at ransom to pay these unsigned and never agreed for variation costs is shocking and I would like to know if he has breached his contractual obligations by doing so.

What can I do to protect myself? Is builder in breach of any obligation to suspend the construction and ask for more money?

Hi Ben,

Sorry to hear you are having issues.

It is going to be really hard for anyone in this forum to give you good advice without first reading your contract and providing a little more detail about what the builder is seeking a variation for.

There are so many different versions of contracts out there with special conditions written by builders to suit them. Your contract may have a special condition that allows this, or not.

The best advice is go see a construction lawyer ASAP. I would be happy to recommend one who works in both Sydney & Melbourne if you like, alternatively google "construction lawyer"

Typically though, it is normal practice that variations need to be agreed by both parties before the work is undertaken unless it's something super urgent. Think back to a rental situation where you have to call the managing agent to get most things fixed unless you have a pipe burst in the middle of the night and then you can call your own plumber ( I hope that made sense!).

Another scenario where you may be up for a legitimate variation is for latent conditions. This is where the builder finds something on site that they couldn't have known about when pricing your home. This could include things such as buried asbestos, underground tanks and the like, or perhaps they had to excavate rock which is generally excluded from most contracts.

Let us know how you get on

Cheers

Simeon

Sydney

Ashington Homes · Aug 10, 2023 11:57 am

Ben

Do you know what sort of frames you are getting ie prefabricated timber, steel, or cut on site timber and do you know how much the total cost is?? also how many square meters is your house?
'
Just want to fact check your builder

Ben126 · Aug 10, 2023 12:25 pm

Ashington Homes

Ben

Do you know what sort of frames you are getting ie prefabricated timber, steel, or cut on site timber and do you know how much the total cost is?? also how many square meters is your house?
'
Just want to fact check your builder

It's a project home packaged with land. Home size 175 sqm (including single garage and porch). I mean all materials must be the cheapest. Timber frame. Total cost at $430k.

Builder demanding $40k more which I think it's not reasonable. The original price was $380k and was increased to $430k before construction commencement. I have contacted some local project home builders and they think current price is reasonable.

ponzutwo · Aug 10, 2023 1:24 pm

Ben126

It's a project home packaged with land. Home size 175 sqm (including single garage and porch). I mean all materials must be the cheapest. Timber frame. Total cost at $430k.

Builder demanding $40k more which I think it's not reasonable. The original price was $380k and was increased to $430k before construction commencement. I have contacted some local project home builders and they think current price is reasonable.

to me it sounds like the builder has outstanding invoices with the framing company.

Ashington Homes · Aug 10, 2023 5:56 pm

ponzutwo

Ben126

It's a project home packaged with land. Home size 175 sqm (including single garage and porch). I mean all materials must be the cheapest. Timber frame. Total cost at $430k.

Builder demanding $40k more which I think it's not reasonable. The original price was $380k and was increased to $430k before construction commencement. I have contacted some local project home builders and they think current price is reasonable.

to me it sounds like the builder has outstanding invoices with the framing company.

Framing for a house of that size should be no more then $25-30k

ponzutwo · Aug 10, 2023 9:32 pm

Ashington Homes

ponzutwo

Ben126

It's a project home packaged with land. Home size 175 sqm (including single garage and porch). I mean all materials must be the cheapest. Timber frame. Total cost at $430k.

Builder demanding $40k more which I think it's not reasonable. The original price was $380k and was increased to $430k before construction commencement. I have contacted some local project home builders and they think current price is reasonable.

to me it sounds like the builder has outstanding invoices with the framing company.

Framing for a house of that size should be no more then $25-30k

Yeah hence 40k MORE on top of a house which already had framing costed. Refusing to move fwd, because can't get frames due to owing framer money imo

Ashington Homes · Aug 11, 2023 10:53 am

Ponzutwo

I think you have nailed it with that theory. The additional increase is paying for someone else's frames.

Cheers

Simeon

ponzutwo · Aug 11, 2023 11:17 am

Ashington Homes

Ponzutwo

I think you have nailed it with that theory. The additional increase is paying for someone else's frames.

Cheers

Simeon

builder has gone full ponzi

Showatt · Sep 02, 2023 6:44 am

Ben126

Hi there,

I am at the stage I don't know what to do next and could really use your advice on legalities, dispute and protection of my own right.

My builder completed the slab stage at the end of May and never replied my follow ups since then. Last week they called me and asking for $40k more though I have already paid a cost variation of $50k before construction commencement. We have signed a cost variation deed and it was agreed there should not be any further price increase.

Placing the construction on suspension and holding us at ransom to pay these unsigned and never agreed for variation costs is shocking and I would like to know if he has breached his contractual obligations by doing so.

What can I do to protect myself? Is builder in breach of any obligation to suspend the construction and ask for more money?

How are you doing Ben?
Extremely interested in hearing what you are doing or plan to do!