Browse Forums Building A New House 1 Nov 12, 2009 8:28 am Hi all... We're wanting to build a home with a local, reasonably reputable builder and have got most of the preliminaries sorted out. (DA should be out any day now ) Anyway, in speaking to a neighbour who built with the same people, they suggested that - as they had done - we consider making some amendments to the contract, to reduce some of our commercial risks, and to have the builder share some of those risks. As an example, the contract spoke about unseen rock, and - if it were found during the cutting of the site - we would be charged per lineal metre extra. We added a clause at the end to cap this liability at $2000 (as our neighbour had done). The builder has rejected this... Also, where liquidated damages are mentioned, the builder is supposed to furnish a figure to address that liability, should they go over the allotted time. They entered "nil". I changed that to $50, and changed "working days" to "calendar days", on the premise that we pay rent on calendar, not working days. They've baulked at using calendar days, but haven't objected to the $50 per day figure. (Mind you, they weren't the least bit chagrined at trying to dupe us out of the liquidated damages in the first place! ) We also deleted clause 5, which says that they can tell us to deposit what would be our own funds into an account jointly controlled by them, as "security". We deleted this because, in our opinion, the unconditional offer of finance from the bank (for the balance of construction costs), should be sufficient to give them confidence in our ability to pay. Remember, this has been done with this builder - and they have agreed - on prior projects. They rejected this amendment. There are a number of other clauses which put risk on to us and - when we inserted a corollary clause which put similar risk on to the builder (where the error or delay was caused by act or omission of the builder) they rejected it. It's quite frustrating. The changes, as i mentioned, were inserted into the HIA contract by our neighbours when they built with this company, and they received the amendments from another person they knew, who had also built with the same builder (and to which they'd also agreed). That first person had actually had a solicitor review them and declare the changes "fair and equitable". Now the builder doesn't want to know... Most people wouldn't even bother reading the contract, I guess, but we have and I'm alarmed by just how much commercial risk is being transferred to us, and what this could (potentially) do to the "fixed price" the contract stipulates. Any advice out there? (Hopefully, apart from "suck it up princess" or similar ) Oh, and again... Hi! Re: Varying a standard HIA contract... 2Nov 12, 2009 8:53 am Which state are you in? The HIA contracts vary from state to state. As for the liquidated damages - definitely include something in there! Mine was $250 per week and was for calendar days and not working days. The whole contract for mine was all calendar days. 'A bottle of wine contains more philosophy than all the books in the world.' Louis Pasteur Vegie garden: viewtopic.php?f=19&t=27637&start=0 My Backyard Adventure Re: Varying a standard HIA contract... 3Nov 12, 2009 10:50 am same as above - whereabouts are you building? If they are using the standard HIA contract understand it is written to be fair to both the builder and the client. liquidated damages are often a tricky one as (from a builders perspective) it never seems to be enough to cover the cost of living. the contract we have works on the basis of approximately $35 per working day - we use working days as they are the days we will be on site building the home. in terms of the bit about the rock - a $2000 cap might seem a bit light on to them as they won't know how much rock is on the site and could go well beyond that. i've seen a situation where someone chose to nominate their own earth worker and have the onus placed on them - first day at site they hit rock. several truck loads later the rock was removed - would have cost well beyond $2000 and no one had expected to find that much rock. i imagine they'll be more than willing to accommodate you but also need to protect themselves. Re: Varying a standard HIA contract... 4Nov 12, 2009 2:09 pm jayw same as above - whereabouts are you building? If they are using the standard HIA contract understand it is written to be fair to both the builder and the client. liquidated damages are often a tricky one as (from a builders perspective) it never seems to be enough to cover the cost of living. the contract we have works on the basis of approximately $35 per working day - we use working days as they are the days we will be on site building the home. in terms of the bit about the rock - a $2000 cap might seem a bit light on to them as they won't know how much rock is on the site and could go well beyond that. i've seen a situation where someone chose to nominate their own earth worker and have the onus placed on them - first day at site they hit rock. several truck loads later the rock was removed - would have cost well beyond $2000 and no one had expected to find that much rock. i imagine they'll be more than willing to accommodate you but also need to protect themselves. Thanks for the replies (this and the one above). We're building in NSW, BTW. For perspective, the clauses we want to amend were suggested to us by a neighbour who built with the same builder (and that same builder agreed to those changes - including capping the rock etc extra to $2000). in their case, they found pretty much none at all (so both were lucky). The neighbours on the other side of us had stacks of rock removed - different builder - (we're all of us on blocks of 5 acres minimum). So, who knows...But (as I pointed out to the builder in some correspondence I just sent off), our budget is tight (aren't they always), and if we were to leave the liability un-capped, it could jeopardise the entire project (or at least the Bank's funding of it ) Anyway, I've sent back all of my reasons for amending the various clauses, including why I think they're fair and equitable, and don't radically increase the builder's commercial risk, while still serving to reduce ours a bit...We'll see how it goes. Re: Varying a standard HIA contract... 5Nov 12, 2009 2:19 pm for what its worth i think your definitely in the right head space with this - just keep talking to your builder and voice your reasons. If they are reasonable they will take your comments on board and work with you toward a solution that helps everyone. On one side you have the builder trying to build a home efficiently and cost effectively as possible, the other side is the client wanting to build a home and get it as quickly and cost effective as possible - two people, same goal, sometimes just requires a bit of to and fro to get on the same page. maybe throw the ball in their court and ask what they think would be fair with regards to the rock breaking or why they don't want to do what you have suggested. Re: Varying a standard HIA contract... 7Nov 12, 2009 7:21 pm It would be nice to sort out the contract at the time you first speak to them so you know about all this after you waster weeks getting them to give you a price, I agree contracts only protect the builder If you have to pay rent due to an unfinshed home you have to pay calenday days... All this unkown site works, etc should be outlawed. Builders should have to give you a proper fixed price contract. The reason I am so hard is the fear of builders looking for ways to "extract more profit out of you once you have started". Many builders depend on the "rip off factor" to make the $$$ Re: Varying a standard HIA contract... 8Nov 12, 2009 7:42 pm i guess it depends on the builder you are with. without plugging the company i'm with too much, we pride ourselves on presenting as much of the up front costs as possible, that way when you sign there's no hidden surprises. we'd rather you come in to prestart and know what costs you already have, so you then can work out how much you want to spend on upgrades etc. some will hide or do the costs as provisional sums to get you in the door and then when it comes time for contracts, will slug you with all the prices they forgot to mention. unfortunately there's no real way around it so its good to ask as many questions and firm up the price as much as possible before signing. the risk of unknown site works is one of those things - from time to time you reach a site where things will come up - who's going to pay for that? from a builders point of view, there's liquidated damages for if they go over the contract time, but there's no monetary benefit to them either if they finish the home well under the contracted time frame either. Re: Varying a standard HIA contract... 9Nov 12, 2009 9:36 pm You can only vary a contract if you are genuinely prepared to walk away. If you are, 90% of builders will modify the contract to make things fair. Once the builder knows you can no longer walk away, all semblance of competitiveness disappears. You will then get hit with price rises due to "forgotten items", get a very poor liquidated damages amount and get a completion date that's 3 months longer than it should be. This is referred to as being over the barrel! While on the subject of liquidated damages, your damages is not the rent you are paying while the build is going on. It's the amount your new house would rent for - this is your damages. (You could go and rent a harbourside mansion while your build is going on or live with the in-laws. Either way, why would the builder be concerned. You could however rent out your newly completed house and remain wherever you are and this is what you are being deprived of, regardless of where you are living. Builders (incorrectly) insist that it's your rent. Well I'm off to the Hilton Penthouse for the last few months of my build ) Demolition August 2009, Construction Started September 2009, Completed December 2010 Re: Varying a standard HIA contract... 10Nov 12, 2009 10:18 pm One more vote for 'the contract only protects the builder'. It's so single-sided it's bordering consumer rights violations (or something along that ...). Actually, it's not the only thing that's "against" the client - even our PCA terms are written in a very unpleasant tone, to put it mildly. So much for consumer protection. We need some serious legal shake-up, it feels like the dark ages! My signature is distracting people from my wise posts ... Re: Varying a standard HIA contract... 11Nov 13, 2009 5:38 am jayw i guess it depends on the builder you are with. from a builders point of view, there's liquidated damages for if they go over the contract time, but there's no monetary benefit to them either if they finish the home well under the contracted time frame either. I don't necessarily agree with the above statement. You would think the outstanding stage payments would be enough monetary incentive to finish the job as quickly as possible. On the contract issue, standard building contracts are written by builders to look after the interests of the builder, not the consumer. If more people refused to sign them in the standard form, then the building industry would be forced to change their ways. They only get away with it currently because the consumer lets them. Prospective clients of builders, don't be pressured into signing a contract you aren't comfortable with, get independant legal advice and be prepared to walk if the builder won't budge in addressing your concerns. This is the only way the builders will change their ways. You talk about deletions, are they variations or PS and PC adjustments? pleas list them 1 16571 10 12325 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 28812 |