Hello Forum Members,
After paying off a block of land over the last 10 years, and entering into a standard form MBA building contract with a well established and reputable builder through a separate sales and marketing/project management service (will leave out company and business names and location at this stage, needless to say I am in a capital city in Australia) the building permit has just been issued. Under the contract, construction must start within 10 days of the building permit issuing. Now the big issue...
The builders have just advised me that (for a variety of costing issues beyond my control or responsibility) there is a possibility that they may not be able to complete the construction at the contracted fixed price as the business may not be viable by the end of construction (again, for a variety of reasons beyond my control).
As a way forward, the builders have provided me with a number of options, some of which involve additional expense. At one end of my range of options, is a decision to walk away from the contract altogether, engage another builder, go through all the work of the past year again, and pay a new (and substantially higher) price.
At the other end of my range of options is a decision to request that construction begin, and proceed as initially planned (and contracted), accepting the risk that the builders may close their doors at any stage of the construction and leave me with a part-built house.
Somewhere in the middle of these two extremes, is the option to enter into a new contract or arrangement with the same builder and have the house built at a higher price. I'm currently seeking legal advice from a property law expert and undertaking my own risk assessment.
To provide some context about the size and significance of this long term investment, the house in question is in the $600,000 to $850,000 price range, the block of land is in a prime suburb (and cost $200,000 a decade ago) and the investment property, once completed, should conservatively be worth $1.2-$1.3M and return $1000-$1300 per week.
As a keen property investor, I've followed this great forum for years reading other people's issues and useful suggestions. This is the last thing you expect to hear a week before the slab is to be poured, so now it's me sharing my issue, and asking for useful suggestions/opinions.
Has anyone else had or heard of a similar scenario? What would you do? Any comments would be much appreciated, and I'll make sure I monitor the thread and let you know how it all ends.
Cheers
After paying off a block of land over the last 10 years, and entering into a standard form MBA building contract with a well established and reputable builder through a separate sales and marketing/project management service (will leave out company and business names and location at this stage, needless to say I am in a capital city in Australia) the building permit has just been issued. Under the contract, construction must start within 10 days of the building permit issuing. Now the big issue...
The builders have just advised me that (for a variety of costing issues beyond my control or responsibility) there is a possibility that they may not be able to complete the construction at the contracted fixed price as the business may not be viable by the end of construction (again, for a variety of reasons beyond my control).
As a way forward, the builders have provided me with a number of options, some of which involve additional expense. At one end of my range of options, is a decision to walk away from the contract altogether, engage another builder, go through all the work of the past year again, and pay a new (and substantially higher) price.
At the other end of my range of options is a decision to request that construction begin, and proceed as initially planned (and contracted), accepting the risk that the builders may close their doors at any stage of the construction and leave me with a part-built house.
Somewhere in the middle of these two extremes, is the option to enter into a new contract or arrangement with the same builder and have the house built at a higher price. I'm currently seeking legal advice from a property law expert and undertaking my own risk assessment.
To provide some context about the size and significance of this long term investment, the house in question is in the $600,000 to $850,000 price range, the block of land is in a prime suburb (and cost $200,000 a decade ago) and the investment property, once completed, should conservatively be worth $1.2-$1.3M and return $1000-$1300 per week.
As a keen property investor, I've followed this great forum for years reading other people's issues and useful suggestions. This is the last thing you expect to hear a week before the slab is to be poured, so now it's me sharing my issue, and asking for useful suggestions/opinions.
Has anyone else had or heard of a similar scenario? What would you do? Any comments would be much appreciated, and I'll make sure I monitor the thread and let you know how it all ends.
Cheers