Browse Forums Building A New House 1 Apr 16, 2010 12:15 pm Hello all, We had our PCI on the 30th of March. The builder had 10 working days to fix defected items that we found and agreed on. It's now a couple of days over that 10 day period. I get a call this morning from the builder chasing our final payment. I said that the house still isn't ready - Items are still being fixed (roof structure, plaster needing repairs on walls etc). She threatened to charge us interest because as far as she is concerned the house is complete. We have a meeting with the construction manager on site on Monday to check the items that needing fixing, and I will have a bank cheque ready on the day to collect keys if all things items are ok. How can they charge me interest if the house is not yet habitable or fit for living in (There is plaster dust everywhere, not even sure if the plaster has been fixed yet either). If anything I should be charging them interest as they have breached the contract by going over the 10 working day defect period. I pay interest only (like most loans) during the construction phase so everyday costs me money as no money is going on the principle. Any thoughts? Thanks in advance. Re: Builder threatening to charge interest on incomplete hou 2Apr 16, 2010 12:33 pm Have a read through your contract. Most people think they can withhold payment until the builder fixes every little thing, but in most contracts there is a clause that states you cant withhold payment due to minor defects. Someone else may be able to help out more with the clause, I dont have mine here... Or maybe you can search your version of the contract online if its a HIA or BSA etc contract? Re: Builder threatening to charge interest on incomplete hou 3Apr 16, 2010 12:47 pm Thanks Ms Builder. I have checked the HIA contract, and it says the builder must rectify defects within 10 days, and also the payment is due within 10 days from 'Practical Completion'. So they have breached the contract also since its now 12 or 13 days and my site supervisor has said the house wont be ready until next week. If they completed the works within that required 10 day period as per the contract, my payment would have been paid on time. If I made that final payment before the 10 days was up and they had still not fixed the items, then I would have no control or leverage as they would have received all monies in full. It's a catch 22, with the contract really protecting Builders rather than the Client. Re: Builder threatening to charge interest on incomplete hou 4Apr 16, 2010 1:08 pm It is a bit of a tricky situation but just because they have breached the contract by going over the time, doesnt mean you are also allowed to breach the contract and withhold payment. I think its been commented on quite a few times on here that the HIA contract heavily favours builders. I wouldnt know as ours is the BSA (Qld) Contract. I think the basis of it most is that you are withholding a large sum for a relatively small amount of work, however it sounds like major work still needs to happen on your house (ie. roof structure). If this is the case, then I wonder how it reached practical completion then? With our first build, we had to make payment and had a list of defects they were required to fix from handover and yes I had issues getting it done (mainly tradies not turning up when they said they would). Re: Builder threatening to charge interest on incomplete hou 5Apr 16, 2010 2:06 pm After reading through this thread, I had another read of my contract which is a modified HIA contract (June 2003). Even paying the final progress claim does not stop the owner from later claiming defects or damage. There is a further 3 month period that the owner can do this. Also my contract does not state how long the builder has to fix any damage, however the contract is not considered complete and the builder may still be liable for weekly damages payments. As an aside my builder tried to add the following clause under special conditions: "Progress payments: the omission of minor items and minor defects are excluded from progress payment stages and therefore must not hold up progress payments, otherwise interest will be charged in accordance with the contract." I asked the builder to define "minor items and minor defects." I even offered the following suggestion: “Minor items and minor defects are defined as items or defects that would cost a total of less than $100 to supply, install and rectify in the aggregate.” It was all too hard for them so they ended up scrapping the clause entirely. At least I did have a minor victory, however I don't think I can withhold a progress payment without an interest penalty. View our blog at: http://room4acubby.blogspot.com/ Re: Builder threatening to charge interest on incomplete hou 6Apr 16, 2010 2:13 pm I would imagine that unless they have issued you with a certificate of occupancy handover cannot take place and therefore the final payment is not due. I built with a volume builder in Melbourne and the final payment is not due until handover day. Handover day cannot be done unless the certificate of occupancy has been issued and the house is habitable. Stand your ground - it would cost them more money to sue you than they would be entitled to with interest payments. Re: Builder threatening to charge interest on incomplete hou 7Apr 16, 2010 2:52 pm i can understand your frustration Jw023. The building contracts always favours the builder and they basically get you to indemnify them from every situation imaginable. So you either accept that and sign, or bugger off. But when all volume builders use the same type of contract....where else are you going to go? For instance, in our site costs they included an $800 allowance for "builder to repair and/or replace kerbs and/or footpath if damaged during construction". Now if the damage was caused by the builder during the construction period, why would I have to pay for the damage? That's crazy! 12 March 2010 - Land titles received 3 April 2010 - Signed building contract 14 April 2010 - Prestart 28 April 2010 - Loan approved 30 June 2010 - Slab completed 27 August 2010 - Brickwork completed 22 September 2010 - Roofing completed 30 September 2010 - Internal walls plastered 12 October 2010 - Lock Up 19 November 2010 - PCI 26 November 2010 - Handover 29 December 2010 - Moved In https://forum.homeone.com.au/viewtopic.php?f=31&t=32584 Re: Builder threatening to charge interest on incomplete hou 8Apr 16, 2010 3:17 pm aLLaNNa1 For instance, in our site costs they included an $800 allowance for "builder to repair and/or replace kerbs and/or footpath if damaged during construction". Now if the damage was caused by the builder during the construction period, why would I have to pay for the damage? That's crazy! I think you'll find that the builder has to pay a bond to the local Council to safeguard against damage. Built a Tribeca 44 with the Big M Sales Accept 15/06/09, Contract Signed 24/09/09, Site Start 23/11/09, Slab 11/12/09, Frame 12/01/10, Roof 20/01/10, Lock-up 30/03/10, Fixing 30/04/10, Handover 27/08/10. Hi, did you get any money from insurance? if you did, does it match what you've already paid the builders? 3 9571 If you already have a contract, is the inspection cost stated in there? If not they would be forced to issue you a variation which you could of course object to. 12 25870 |