Termination of building contract due to being unable to get

Hi all
My husband and I are seeking advice on whether we are legally entitled to our 5% deposit back (or at least some of it) when we had to cancel our contract due to being unable to secure finance. Our land was so delayed in titling that our approval expired and when we went to re apply we got declined due to our finiancial situation changing. The building company have said they are entitled to charge ‘reasonable amounts’ for works already completed, but this is virtually our entire deposit! I don’t see how administration costs for example can equate to over $2000 when no physical work was even started. It just seems plain greedy to me! Is this worth fighting or do we cut our losses?

Wow, that sucks. I hope you eventually get funding. Banks are really tight now. Fight for it.

From reading your other post you were at getting developer approval stage, which means construction plans, colours etc have been completed.
I’m not sure why you think they are not entitled to be paid for services provided to date.
Have you tried obtaining finance through a different bank?

Did you mean 5% of the total build? That's a lot. So $25k for a $500k total build. Our land isn't titled yet until mid next year but in the process of drafting plans with the builder. We've already paid $1500 to secure the base price of the home but there is a 3 week cooling off period and isn't refundable after which I think is fair since they have already spent hours with estimates and drawings. We will then need to pay another $1500 to finalise the drawings, which I think isn't refundable too. I thought 5% deposit is only required once the land is titled and finance already approved for the build. I need to check this with my builder as it scares me if I need to pay 5% immediately as we don't have guarantee until we have the land titled and finance approved. When we had our first home it was a bit different as we already had our titled land so was able to apply finance immediately before the build. Hope someone can advise you on this and please keep us updated.

Agree Melbournevic, the figures dont seem quite right, but if I had paid 25k I’d be looking at every available option before walking away, including another bank/mortgage broker.
I’d also ask for a detailed invoice of all costs to date.

Unfortunately, You have signed a standard Agreement/Contract that favours the builder when you default
Sorry cut your losses, it's not worth fighting

I just don’t think those are reasonable charges for what little work has been done. Yes I understand we had to pay for colour selection appointment and plans etc but $2000 for administration costs seems outlandish!

So how much have you paid and what has been done so far? We walked away before signing a contract but had paid several thousand $ which covered plans, valuations, tile app, colour consultations, surveys etc. we got nothing back but we didn’t fight it. But if I was walking away from 5% of our build than that’s a lot more than a few thousand $

Agreed - $2000 paid for soil test, quotes, drafting, staff time at selections... If that's the amount, then I'd say it's pretty reasonable, maybe a little for the builder on top. If it's 5%, then i'd be fighting tooth and nail for it. A few thousand dollars is reasonable for that amount of work/time. $10-30k is not.

Hi Melissa, please clarify how much have you paid whether $2k or 5% of the total build. Thanks

We have paid 5% of the total build.

Unfortunately we had paid 5% of the total build so that was over $11k. They have sent us a vague breakdown of costs such as colour selection appointment $900 etc but I feel like they’ve just made up the rest to add up to our deposit such as admin costs $2950!! It’s outlandish!!

We paid 5% of total build so over $11k

Now I got what you mean. Over $2k for that admin cost is ridiculous and so is the 5% of the total build. Which builder were you in? If someone's financial has changed and is unable to apply for loan, losing another 5% adds more burden. Seems unfair for us. Hope someone can advise you here.

Reach out to the builder ask for a breakdown of costs so far and then ask for the remainder to be returned. If they won’t work with you go to fair trading. I believe our contract says something to the effect of them being entitled to cover expenses and costs incurred including a builders margin.

We were with Sherridan homes. That’s what I thought! It’s so unfair we just feel sick about it!

I’ve had this discussion with our builder after we changed from another builder because of delays, price increases etc. We wanted to make sure we didn’t lose another $4k so I went through this carefully the second time around. We were told that the first payment covers working plans, soil tests and a fixed price which is enough to give to a lender. Once finance is approved the 5% is paid minus the initial payment which is the $4k. If finance isn’t approved then we lose the $4k which from my calculations seems quite fair. People we know gave a $12k deposit, changed builder and got it all back. I’m not sure where you are but I wouldn’t be giving up on it too quickly. I’m not chasing as much as you but I’m not going to make it easy. Get some legal advice.

I am in a similar situation. My builder promised a price lock till early next year but they are now denying to fulfil the promise as my land title has delayed. They are charging me 1k each month after August 2018, that would equate to 7k till march 2019 (expected site start).
The price lock promise was advertised everywhere when we engaged them but unfortunately it is not mentioned in the contract. It was(still) mentioned on their website/blogs which they are not willing to consider.
I paid 2k as initial price lock and I am in a situation to negotiate on the extra charges incurred due to the delays. If not, I’ll walk away to some other builder.

I hope that you get your hard earned money back.

immu999 Sorry to hear that. It is a matter for consumer protection ... please post back as to how you go, goodluck...

structuralBIMGuy I did contacted them to comment on the claims they had on their website for the price lock promise. but they are just ignoring my emails (commenting on other things but not on this). Instead, they have removed their blog on the price lock promise after i quoted it.

I have lodged a complain on DBDRV website, but it looks like it takes months to get process. By then i'll have my land titled.
- not sure how to handle it. $1000 a month till site start, i'll losse around 7-6k on top of what was agreed in the contract.

Builder is Carlisle Homes.