Long gone are happy days of starting your renovation. Delay after delay, your handpicked builder is not up to the task of completing your renovation and now you terminating the builder contract.
Bad news. An incomplete reno means your prized asset is near worthless, inhabitable, and can’t sell a half-finished home. With no real home asset, and the mortgage remains outstanding, and probably forgot to inform the mortgage provider of the actual situation.
The Building Industry Credit Bureau reports 2019 is experiencing a 14.7% increase in construction, builders and sub-contractors insolvencies over the previous year, and 2018 was a record year. Builder’s insolvency’s, or unable or incompetent trades to satisfactorily compete for a building contract is not unusual.
Small claims tribunals such as VCAT are jam-packed each day with such cases. It’s not such a big deal unless it’s your home, your money and your family lifestyle that are embroiled in these messy situations. Not all is lost though, and increasingly many caught in these circumstances decide to complete their dream as owner builders. Under this option, a homeowner controls the quality of work, costs and schedules, and as a rule, will save around 38% off standard builder rates.
Terminating a building contract is not as simple as sending off a text or email and expressing your feelings in the most colourful and expressive manner known, but as a legal contract is in play, legal advice should be sought beforehand.
Consumer Affairs (VIC), DFT (NSW) and other consumer advocacies, including State Building Authorities publish many facts sheets on their respective websites. Unfortunately, most information is so general in nature it clouds any viable way forward, so best to seek independent legal advice.
- “our firm receives on average 12 new applications for insurance, from homeowners terminating their builder, each week. In nearly all cases their legal advisor suggests insurance is first and foremost. Obtaining insurance on a partially completed construction or renovation is not a straight-up request, and just pay the premium, it’s a little more involved, as the risks are more pronounced and broader than a new build.
- For example, risk by malicious damage by disgruntled or unpaid sub-contractors of the head contractor or builder, or disgruntled builder not paying suppliers, even though a homeowner may have paid the builder in full on termination, and the supplier within their rights retrieving unpaid goods; is all very common and comes with high risk tags. The unseen and little understood circumstance of unsuspecting contractor injury claims arises well after the builder has been terminated, seeking compensation or loss of income claims. But in nearly all cases, insurance is possible without onerous conditions attached to cover, or outrageous premium hikes” says Sam.
(Note. All product names and registered trademarks are the property of their respective owners)Tags: owner builder insurance, Owner Builder Public Liability
This post was written by Technical Underwriting Centre