Browse Forums Building A New House 1 Jul 10, 2019 12:22 pm Hello All,
After waiting 2 years for the land to be titled we are just about to start building a 5 bedroom house with one of the largest volume builders(I wouldn't name any names at this stage) in Victoria and what was promised to be smooth sailing is fast turning into a nightmare even before a single shovel has hit the ground. As with many members building at a greenfield development it was a matter of deciding on the design, upgrades and signing the contract and organising finance during this two year long waiting period so construction could commence as soon as the land is titled. During this time we've had no less than 5 coordinators as they seem to not last more than couple of months in their job. Since the interaction with the builder was minimal during this wait period we didn't really care much about this ever changing contact person situation until two weeks ago when we informed them that the land had been settled and they could start the build. We structured our finance in such a way where every last dollar of our savings were put towards the land purchase and the bank would fund the construction fully. While organising the loan about two months ago my broker contacted the builder directly and they provided him the original contract and all variations that were signed afterwards. The loan was approved based on these documents and we were all excited as the build was about to commence but unfortunately that excitement didn't last very long. Last week our build coordinator contacted me and broke the bad news and in a summary it went like this: 1. At the time of signing contracts we haven't had the heating/cooling options finalised as they were rushing to get us come in and sign the paperwork. So the contract was signed with no hating and cooling and few days later I emailed them approving a multi-zoned ducted system quote but the coordinator at the time forgot to create a variation based on my email or ignored that email altogether so none of the documents provided to the bank had any information or pricing for heating or cooling. Now they have discovered this error and are asking me to accept the house only with provision for heating and cooling which is to be installed post-handover by us. I'm not sure if it is even legal to handover a new house with no heating let alone cooling and the other option given was to fork out $23,700 ourselves which was the value of the original quote I approved almost two years ago. 2. Couple of days later comes the next shock! They forgot to send the tile variation worth $14,000 to the bank so that wasn't included in the construction loan either. So in total they are asking us to come up with almost $38,000 if we are to have the tiles and refrigerated heating and cooling which we approved and signed for at the time. So what do you think my options are right now? Both invoices should have been included in the construction loan but only if they've done their job of submitting all variations to the bank right. As the builder they have neglected their duty of care and not sure how they think it is as simple as requesting us to pay that amount now while we are paying both a mortgage and rent right now and with all our savings tied up with the land we purchased. Of course I do believe that we too should have checked all the facts and figures submitted for loan approval but it was the builder who provided all costings of the build directly to the broker and the bank. Do I have any legal rights in a situation like this or do I just find the money and move on? With a baby on the way we had the whole build and post-build plan(drive way, landscaping, appliances, curtains, etc, etc.) tightly budgeted out and now this is creating a massive hole in our finances and I don't think we should be left to deal with the unnecessary stress of finding the extra cash simply because someone else didn't do their job properly. TLDR: Builder forgot to submit variations worth $38K to the bank during loan approval and now they want us to pay the full amount ourselves. Re: Builder forgot to submit variations worth $38K to the ba 2Jul 10, 2019 1:11 pm Can you not go through your broker and get loan amount increased? The valuation should already be quite good based on the fact upgrades are included but weren't factored into the price. Agreed that is not a nice amount to be expected to front cash for... Re: Builder forgot to submit variations worth $38K to the ba 3Jul 10, 2019 1:11 pm I would before anything else have got a building inspector with a pre contract inspection also,that way mistakes get picked up if they were mistakes and not intended to get your business with a lower qoute and then basically force you to accept,look at building experts website ,it may not be too late to pull out if necessary, good luck. Re: Builder forgot to submit variations worth $38K to the ba 4Jul 10, 2019 1:45 pm It's a difficult situation you're in however I can't see how it's the builders responsibility to forward on your post contract variations to your lender. You're the one responsible for sending the variations to your lender as you need to provide capacity to pay to the builder. Unless they never issued you a variation & invoice?? As King Taco said your option is to now go to your broker with the variations and see if they can increase the loan amount to cater for the variations. The lender should still be comfortable lending you 80% of the total variation cost (providing the valuation adds up) and you'd have to come up with the remaining 20% about $7.6k Again, sorry for the situation you are stuck in. I know building can be a stressful and expensive exercise. Hope this helps, Re: Builder forgot to submit variations worth $38K to the ba 5Jul 10, 2019 8:03 pm l_vanslyke It's a difficult situation you're in however I can't see how it's the builders responsibility to forward on your post contract variations to your lender. You're the one responsible for sending the variations to your lender as you need to provide capacity to pay to the builder. Unless they never issued you a variation & invoice?? As King Taco said your option is to now go to your broker with the variations and see if they can increase the loan amount to cater for the variations. The lender should still be comfortable lending you 80% of the total variation cost (providing the valuation adds up) and you'd have to come up with the remaining 20% about $7.6k Again, sorry for the situation you are stuck in. I know building can be a stressful and expensive exercise. Hope this helps, Agree - its a post contract variation - you are responsible for the costs here. Re: Builder forgot to submit variations worth $38K to the ba 6Dec 15, 2019 11:05 am I hope it’s not the same builder in the South East that we are having problems with. Legal disputes are a nightmare trust me, you would be better off paying the money and moving on. hyperion Hello All, After waiting 2 years for the land to be titled we are just about to start building a 5 bedroom house with one of the largest volume builders(I wouldn't name any names at this stage) in Victoria and what was promised to be smooth sailing is fast turning into a nightmare even before a single shovel has hit the ground. As with many members building at a greenfield development it was a matter of deciding on the design, upgrades and signing the contract and organising finance during this two year long waiting period so construction could commence as soon as the land is titled. During this time we've had no less than 5 coordinators as they seem to not last more than couple of months in their job. Since the interaction with the builder was minimal during this wait period we didn't really care much about this ever changing contact person situation until two weeks ago when we informed them that the land had been settled and they could start the build. We structured our finance in such a way where every last dollar of our savings were put towards the land purchase and the bank would fund the construction fully. While organising the loan about two months ago my broker contacted the builder directly and they provided him the original contract and all variations that were signed afterwards. The loan was approved based on these documents and we were all excited as the build was about to commence but unfortunately that excitement didn't last very long. Last week our build coordinator contacted me and broke the bad news and in a summary it went like this: 1. At the time of signing contracts we haven't had the heating/cooling options finalised as they were rushing to get us come in and sign the paperwork. So the contract was signed with no hating and cooling and few days later I emailed them approving a multi-zoned ducted system quote but the coordinator at the time forgot to create a variation based on my email or ignored that email altogether so none of the documents provided to the bank had any information or pricing for heating or cooling. Now they have discovered this error and are asking me to accept the house only with provision for heating and cooling which is to be installed post-handover by us. I'm not sure if it is even legal to handover a new house with no heating let alone cooling and the other option given was to fork out $23,700 ourselves which was the value of the original quote I approved almost two years ago. 2. Couple of days later comes the next shock! They forgot to send the tile variation worth $14,000 to the bank so that wasn't included in the construction loan either. So in total they are asking us to come up with almost $38,000 if we are to have the tiles and refrigerated heating and cooling which we approved and signed for at the time. So what do you think my options are right now? Both invoices should have been included in the construction loan but only if they've done their job of submitting all variations to the bank right. As the builder they have neglected their duty of care and not sure how they think it is as simple as requesting us to pay that amount now while we are paying both a mortgage and rent right now and with all our savings tied up with the land we purchased. Of course I do believe that we too should have checked all the facts and figures submitted for loan approval but it was the builder who provided all costings of the build directly to the broker and the bank. Do I have any legal rights in a situation like this or do I just find the money and move on? With a baby on the way we had the whole build and post-build plan(drive way, landscaping, appliances, curtains, etc, etc.) tightly budgeted out and now this is creating a massive hole in our finances and I don't think we should be left to deal with the unnecessary stress of finding the extra cash simply because someone else didn't do their job properly. TLDR: Builder forgot to submit variations worth $38K to the bank during loan approval and now they want us to pay the full amount ourselves. Fair Trading can issue orders to rectify and complete but once the matter goes to NCAT these orders are automatically vacated. You will have to terminate contract and sue… 21 29758 It seems very clear to me that your contract states that a security account does NOT need to be established so the answer to the builder is NO. If in doubt find a contract… 1 8511 The fastest thing a builder will do is bank your cheque, those systems work perfectly with lightning speed, everything else is slow burn. Just the way it is. 1 8711 |