Browse Forums Renovation + Home Improvement 1 Apr 27, 2014 10:55 am Will appreciate feedback from anyone who has been through this scenario. Cost plus contract, build is halfway. Untrustworthy builder with no idea on how to read plans nor build (we are getting a building inspector to list all the defects). He has also charged us for 6 months on fuel and buying his tools. Then putting 10x people on the project and missing every milestone (breach of not building on time as well). The main thing here is that for the last 3 months, completely blown out of budget and he underestimated the total build cost. Now when we are saying we expected to build under $400K yet we have gone over $600K, he is saying "it was an estimate only". We have no trust in him whatsoever and think it is best to terminate this contract. I have spoken to a lawyer who says not advisable to terminate the contract but four others have said if it is a breach (which we think it is), we can terminate. Anyway before I spend money on Lawyers, anyone been through this and successfully terminated a cost plus contract (HIA)? Re: Termination of a Cost plus HIA contract 2Apr 29, 2014 8:01 am I think what you need to do is write a letter to the Builder - sent by registered post - detailing all the issues you are having as well as copies of any inspection reports you have (will cost but if you haven't already get an independent building inspector in now to do an assessment of the work). Highlight other issues ie cost of variations (if variations go over a certain percentage over the build cost given originally that can be end the contract) and the lack of progress with the build. Do you have a completion day? You need the builder to repudiate the contract ie disagree with the defects and progress of the build and then you can terminate the contract. You need in writing the Builder's refusal to attend to problems ie not following the contract, If you plan to take the Builder to say VCAT if you are in Victoria you have to be very careful how you terminate the contract. You have to show just cause and that you have followed legal processes. Sometimes the fact that a domestic building client has not paid all the progress payments can be used against them, even if the Builder has breached the contract so you have to tick all the right boxes etc. If you google terminating a domestic building contract there is some good advice on it. The builder may take you to court ie VCAT if you don't pay all the progress payments. You should get a lawyer on board, yes i know expensive but it makes it easier to adhere to the legal process of ending a contract. I do know of someone who terminated the building contract due to the Builder repudiating their claims that the builder had done defective and incomplete work and refusing to attend to the problems. It has been a hard slog for them. Also make sure you have photographic evidence of the work done or not done, copies of all variations (ensuring that you have signed them), and records of all conversations and communications with the builder. You could arrange a meeting with the Builder and the building inspector so that you are being seen as being fair and reasonable and it will also allow you to gauge how the Builder will act. I would record any further communications with the builder and their staff to use to make accurate notes of what has occurred. Make sure you have a diary of all events and communications. Re: Termination of a Cost plus HIA contract 3May 03, 2014 9:57 pm Tks for your response. This week, we hired a building inspector and got all the defects listed so has proven that this has been so negligent of the builder. Problem is now, we don't want him on site to remediate the defects as we don't trust this guy to come back and fix.....and when there is no trust or good will.... very hard decision as worried that if we dont give him the chance to fix, he will sue us for non-payment. Re: Termination of a Cost plus HIA contract 4May 04, 2014 8:56 am You definitely need legal advice and need to tick all the boxes using due legal processes. Possibly if you give the Builder the list of problems he will walk away from the job but make sure there is a paper trail, All communication you send the Builder must be by registered post at the very least. Make sure you document and photograph everything. Go through your contract and follow every step. If the Builder does take you to court for non payment, make sure you can prove why you should not have paid him ie progress stage not completed yet you were billed for it. You probably will need to offer the builder a chance to make repairs but this is a question to ask a lawyer. Count up your variations as that might also be leverage against the builder. It may be difficult to get a builder in to repair and continue with the work because of issues such as warranties of the work etc. But please get legal advice and ensure you have evidence etc. Re: Termination of a Cost plus HIA contract 5May 04, 2014 2:17 pm My obvious question is why is your building inspector not advising you properly what to do? Perhaps you should have checked his expertise before giving him the job. Foremost Building Expert in Australia,assisting with building problems/disputes, building stage inspections,pre-contract review advice for peace of mind 200 blogs http://www.buildingexpert.net.au/blog Re: Termination of a Cost plus HIA contract 6May 06, 2014 4:55 pm You are in a legal contract You must be very careful to get all the Legal steps correct and in the correct sequence. The HIA may give you some advice up to a point, but then they will refer you to a recomended lawyer or lawyers who are very good but very expensive. I was lucky to latch on to some commercial lawyers who advised me in practical way and at reasonable costs (Dont know if I am allowed to mention names here so will not for time being) You will have to do some homework as well, such as getting good understanding of all the terms of the contract, making a diary of exactly what was done by what dates and who said what to whom, and what was paid and for and when , and probably other schedules as advised by your legal advisors. Re: Termination of a Cost plus HIA contract 7May 06, 2014 9:07 pm HIA were so unsupportive- they said they could not help me as I was not a member. I have taken all the right steps (based on BI and legal advice) and because I now have evidence, I will send through the the default notice and list out how/why. Question do you know anything about the quantum of costs paid v value of defective work? Thanks Re: Termination of a Cost plus HIA contract 8May 06, 2014 11:33 pm s41 of the Domestic Building Contracts Act Vic 1995 Ending a contract if completion time or cost blows out for unforeseeable reasons (1) A building owner may end a major domestic building contract if— (i) the contract price rises by 15% or more after the contract was entered into Send a registered letter stating section of the act to builder. Job done Thatl be $2000 thanks Builder - Extensions & Renovations Re: Termination of a Cost plus HIA contract 9May 07, 2014 5:47 am NathanBoxa s41 of the Domestic Building Contracts Act Vic 1995 Ending a contract if completion time or cost blows out for unforeseeable reasons (1) A building owner may end a major domestic building contract if— (i) the contract price rises by 15% or more after the contract was entered into Send a registered letter stating section of the act to builder. Job done Thatl be $2000 thanks Spot on I agree However ending the contract does not necessarily end the dispute and the builder will want to get paid for the work done. Builder's claim will be (Quantum of costs )value of work done - cost of rectifications Having said that, cost plus contract is like giving someone your cheque book to play with, why on earth did you do that? Foremost Building Expert in Australia,assisting with building problems/disputes, building stage inspections,pre-contract review advice for peace of mind 200 blogs http://www.buildingexpert.net.au/blog Re: Termination of a Cost plus HIA contract 10May 07, 2014 10:58 am I am not familiar with the Victorian Contract. HIA Contract I have used before. No one likes cost plus, including builders (or they should not because the admin is huge compared to Lump Sum Contract and the client is hugely suspicious of everything that happens, or doesnt happen) Sometimes (usually because there is a lack of detail in the drawings and specifications) cost plus is the only way for client and builder to get on with the job. If the process gets nasty from here and goes to arbitration, the Builders estimate is not taken into consideration. The most likely way to value work done is for the builder to prove the amounts with invoices, diaries for his time. Subcontractors quotes etc, Any partially completed work can only be valued by an independant expert (ie another builder, or quantity surveyor, or tradesman for a particular piece of work) 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. 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