Payment Structure Query in MBA Contract: Seeking Advice

paul_di · Oct 09, 2023 12:01 pm

Hello fellow members,
I hope you're all doing well. I have a question regarding the payment structure outlined in my MBA contract with my builder. I'd greatly appreciate your insights and experiences on this matter.
Here's the situation:

My builder is requesting that I pay the entire amount, including the final handover payment, upfront. They have mentioned that they will later credit me for certain items specified in the contract that we mutually agreed not to proceed with. These items include upgrades, molding work, and builder's credit for kitchen appliances.
My understanding was that deductions for items not completed or changes made (variations) would be accounted for either before the final handover payment or during the variation payments as work progresses. However, my builder insists that I pay for all variations now, along with the final handover payment. My build is still ongoing, with some finishing work remaining.

I'm curious about your experiences with similar situations and whether this payment request aligns with common practices or if it's reasonable. Your input would be greatly appreciated, as I want to ensure a fair and transparent payment process.

Thank you all very much for your assistance, and I look forward to hearing your thoughts and experiences.

KnockItDown · Oct 09, 2023 5:04 pm

Are you financing the build through a lender?

If so, then I'd very much doubt you will find a lender that will agree to these terms as it's too risky. There's very little stopping the builder declaring bankrupt the moment they get all the money which will leave you with a mortgage to pay but nothing but a vacant block and no house to show for it.

I'd be extremely careful.

paul_di · Oct 09, 2023 5:26 pm

Apologies, my post may not have been clear. I am nearing the completion of my construction project, with only the final payment remaining due. Throughout the various stages of the project, I have requested several upgrades, and I have promptly paid for those variations. During the final stage, I made numerous upgrades to the kitchen. My understanding was that since this is the last stage and I have provided several items to the builder, they should credit me accordingly.

I have already discussed the credit amounts with the builder. However, the builder is insisting that I pay the full cost of all variations and complete my final stage payment in full. They have stated that the credited amounts will be provided to me after the settlement is finalized.

Is this a standard practice in MBA contracts?

building-expert · Oct 09, 2023 7:44 pm

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 the work not done and then hope you will get it back?