Building contract - break contract?

[irawin]

Hi everyone

I have signed a HIA contract - SA (Dec 2013) with builder for a knock down and rebuild and it was subject to Finance till 30 April 2014 and also paid for preliminary works. I have asked my Mortgage broker to help obtain the finance of $220k (stated in building contract) in which we obtained pending council approval.

I received the Engineer soil report in which the soil is very bad, spoke to a few friends in the building industry stated could be in the range of $40k to $55k. Builder stated $15k allowance above builder standard included in contract therefore I'm looking at least another $25k to $40k. As per the council rules, we can?t demolish the current house until planning approval is given for the new replacement and we just have more delays with council. I have been hassling for my selection and footing variation from builder but they don?t want to release it as they are waiting for council approval.

My intention of the $220k borrowed was for the building ($183k) + selection variance ($8k), demo ($8k), air con ($10k), paving & stormwater ($11k). All the other bits like curtains, tiling (got them, DIY).

One of the HIA clause points did state -"We/I tried our best to obtain finance."

What I am trying to ascertain is that I did obtain finance (approved) but only a portion towards building & selection variance and the rest was allocated to demolition / air con / paving etc. Due to an unexpected blowout in footings causes me to use up the other allocation, I don?t have any money left / air con and paving. Am I still tied to the contract? I know I am pre-empting and I should have (hindsight), get a soil test done first before signing any contract.

Such a stress building..

Any advice will be greatly appreciated.

Cheers
Irawin

 

[irawin]

bump anyone?

 

[lizzie]

I think the problem is, is that no one actually knows what you are asking.

Why are you wanting to get out of the building contract?

Is it because you can afford the extra soil works? Is it because you've seen something else you'd rather build? Is it because work is "scheduled" to start before you've got approval? Why are you having delays with council?

 

[irawin]

I think the problem is, is that no one actually knows what you are asking.

Why are you wanting to get out of the building contract?

Is it because you can afford the extra soil works? Is it because you've seen something else you'd rather build? Is it because work is "scheduled" to start before you've got approval? Why are you having delays with council?

Hi Lizzie

It will be more due to blow-out in extra cost in soil works. I have factored extra, as mentioned, haven't received costing yet (but did not expecting it to be so much).

Delays with council due to 1) area being subject to 1 in 100 year flood inundation occurence, 2) some design not adhering to council design technique so needs revised plans.

Maybe my expectation is too high, I feel that my Builder has not done enough research for my plans according to the respective council zoning design techniques (this could have save time and money) and obviousily with the estimation of site costs.

 

[underdev]

Hi Lizzie

It will be more due to blow-out in extra cost in soil works. I have factored extra, as mentioned, haven't received costing yet (but did not expecting it to be so much).

Delays with council due to 1) area being subject to 1 in 100 year flood inundation occurence, 2) some design not adhering to council design technique so needs revised plans.

Maybe my expectation is too high, I feel that my council has not done enough research for my plans according to the respective council zoning design techniques (this could have save time and money) and obviousily with the estimation of site costs.

It is common amongst some project builders to get you to sign a contract before soil test. I always do a soil test before buying land.

I then take the test to the builder and get them to quote from that test, it can save you this problem in the future.

Re contract. If you cancel this will only delay council approval! You will still need to build with someone else and you will still have the same soil issues. so.....

 

[irawin]

Re contract. If you cancel this will only delay council approval! You will still need to build with someone else and you will still have the same soil issues. so.....

Agreed.... I will have to wear it and get a building inspector to inspect the works along the way, the house on the block does not suit our current needs with 2 kids.

 

[westminster]

If you are able to get out of it what will you do? Sell?

I believe (and I could be wrong) that if read your HIA contract it will say that for a provisional sum (eg your earthworks) that it can only be increased by XX%. If the amount is more than that then I think the Builder has to wear it.

So if the builder said and put in the HIA contract that it is $15 extra over their normal rate and your HIA contract says that provisional sums can only have a 20% increase then you only have to pay up to $18k.

I could have that totally wrong but that is how I read/interpreted my HIA contract

 

[Chomp]

I agree with Westminster, I'm not sure of the exact contract clause but from memory we need to be within a certain % when it comes to providing provisional sums.

But in fairness without a soil report how would they know ? these things are bit like the term "reasonable" being used in contracts.

However this might be enough to get you out of the contract, worth a shot.

 

[irawin]

Thanks for the feedback!