Building contract cancellation & going with another builder

Hi Guys,

I have signed a contract and paid 5% deposit to the builder since early December 2017. This is a custom builder and not a volume builder.

My building permit was issued at the end of Feb 2018.

Its almost 4 weeks now and the Builder has not yet started the construction, every time I call their office I get different dates as to when they are going to put up the temp fence and when they are going to do site prep etc. There is a lot of handballing at Builder's office, I've been asked to speak to site supervisor/project manager/ sales manager etc to get an update and all of them vaguely update me but nothing happens on the said dates.

I am at a stage now that I don't trust this builder at all to start and/or complete my house in 5-6 months time.

I've spoken to their past 3 customers and every one of them had very positive feedback about this builder. They told me that their respective houses were built within 5-6 months and they are very happy with the build quality.

Also, I advised them that I am planning to higher an independent building inspector for all the stages of the build, the Builder advises me that if I do that then it will take at least 1 month for them to go through the defect list and clear them off. I told them to do a better job so it does not take them 1 month to fix the defects. They advise me that these building inspectors are a waste of time as most of the time they just point out minor cosmetic issues. I think this is a scare tactic that they are using for me not to use an inspector.

I think that in the last year or so this particular builder has got too many new building contracts and going over their capacity to manage the bigger volume of new house constructions and hence they are not able to cope of with the demand.

I am currently renting and my wife is going to leave the job in about 6 months as we are expecting our first child hence if this builder delays the construction process then it will drastically affect my situation.

I've checked the building contract and they have allowed themselves about 310 days to complete the construction, the liquidated damages are merely $10 per week. I wished I got the contract reviewed by a solicitor before signing it.

One of my work colleagues has recently built his first house with a private builder and the house was finished and delivered within 6 months time. I've met this builder and seems to be a very down to earth genuine bloke.

If I go ahead and cancel my building contract then my questions are as following:-

- Can I use the existing approved customised floor plan?

- Does the new builder will have to get a new building permit or is there any process of changing builder's name on the existing issued permit?

- How much money will I lose out of my 5% deposit?

I've been told by quite a few people that these delays are quite normal in building industry and that I should give this builder a bit of time however at this stage it's becoming a trust issue for me with this particular builder.

I will appreciate your responses in regards to this issue.

Did you get the building permit or did the builder get the permit. I say be prepared to lose all of your deposit. It took about a month for our builder to start after building permit was issued.

A five to six months build...I'm surprised. Must be a very simple design.

Is the design yours or the builders? If the builders, you might have trouble getting permission to build it.

The builder got the building permit. I paid about $18000 in deposit so surely it didn't v cost them that much. I should be able to at least get 75% deposit back

Well there would be the soil costs, drawing plans, building permit, engaging the surveyor and whatever else they have organised to date. You have to read what your contract says about cancelling.

It's a single storey 30sq house.

I told them a plan that I liked from another builder and than worked with their draftsman to customise it as per my requirements.

Also even if you cancel and get back some of your deposit it take you at least three months to get to the actual construction stage again.

The contract is a generic Master builder contract in which if owner cances the contract then Builder is entitled to recover the money that they have spent so far...

This can be any figure that they might pull out of a hat however I will ask them for a breakdown

I understand that but I just want to cut my losses right now.

Sometimes I think that I am being too paranoid and the builder will pull through but when I don't see any action on the ground it utterly disappoints me

It does take awhile for the whole process specially with admin. If people have built with him before. And his got a good rep. I would stick it out a bit more. Or get something in writing through an email about start dates. Paper trail is the best evidence. Read your contract first. And check out the process of how long from time if 5% to site start. The I would write that email requesting an offical start date.




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I have sent multiple emails asking for a site start date but have not been advised anything however they did a site set out last week so I guess that can be counted as site start.

I would tread very carefully and get a legal advice about ending the contract or you may loose much more than you think.
If you end the contract unlawfully you may still have to pay builder's profit as if he has completed your home maybe 20-30 % of your contract price. Mere delay does not give you the right to end the contract regardless of how you feel about the builder.

So I guess my only option is to wait it out...

What is the turn around time for a builder to start construction once the building permit is issued?

I will speak to them again face to face this week and try and make them understand my urgency and hope things get in motion in near future

Yes, after you sign the contract you have no control over builder's timing.
If you sign off on a bad deal the law will not protect you.
How on earth did you agree on $10/week for liquidated damages?

Unless the contract states when the builder starts after building permit issued. Ours stated that the builder must start within 30 days of permit. You might want to check in your contact.

Also I agree your liquidated damages is a pittance. Too late now as your agreed to the contract.

Its completely my fault, I did not know anything about liquidated damages and the builder told me that the contract they do is Master Builders standard contract and nothing to worry about.

If I knew about it and got maybe about $300 per week for liquidated damages + completion date (6 months) then I would not be stressing out right now. Well its after the face now and cant change anything but I am keeping my fingers crossed that it will be completed in 6 months time and a life lesson has been learnt

I checked it and it does not mention any start date, it has standard wordings that the builder needs to take all the reasonable steps to start the construction work once the building permit is issued.

My building permit was issued on 26/02/2018 and builder performed the site set out on my land on 27/02/18, I am just wondering if it counts as a start date?

That how my build started.

Hey icat, I went to your blog and really loved it.

Could you please tell me how often do you get updates from your builder and whom do you speak to get one?

Through the Administration Phase they would either answer my phone calls when I called or if I sent an email I think the longest response time was 48 hours.

I've had one email from my Site Manager with a schedule of tasks that have now been completed. Just waiting for the slab to be ready for the frames but frames are anticipated for 23 March. We check the site ourselves everyday and something been happening and we can see that things are happening.

Thanks for your nice comments about my thread.