Can I sue our Builder for not finishing our IP in time

Hi there,

we currently building an IP and the site work as finalised on 25th October 2007. By law the builder has to start within 3 weeks or so ... They did ....
Fast forward to 25th April 2008 - We had a look 2 weeks agon and the house is there but, some stuff is broken, Carpet & tiles are missing ...etc. We can't get a tenant in for another 2 weeks or so ... we tought ! Today i had another look. They haven't done a thing within the last 2 weeks. This is incredible ...we live 1 hour drive from the IP so we can't "control" on a daily basis.

It's getting really anoying and even expensive without tenant...

I have heard you can sue your builder to get some interest back ...but I am not sure what the conditions for that are. Certainly 7 months were not in the contract..

Any ideas what we can do ?

Contact the builders registration board and bring it to their attention. They can tighten the screws on the builder if in breach.

Pressure applied to their livelihood is a lot greater than the pressure applied by one client.

Hope this helps.
There is usualy something ridiculous in the contract that allows you to get compensation if late in completion?

Ridiculous because it is hardly enough per day to cover the cost of a couple of beers with lunch let alone interest payments while unfinished.

Are you saying its taken them 6 months to finish off or 6 months in total to build? That is not an unrealistic timeframe. Perhaps Qld's have been spoilt by efficient builders in the past?

Unfortunately a statement of claim probably won't get very far with these guys. The hassals and time you exert is probably better applied elsewhere. Get on to the site super directly and not the office manager. Find out what the issues are and get him to sort it out. Before making the final payment, get a professional building inspector to go through handover with the super seeing you're an hour away.
No,6 month in total build ...they started beginning of November '07 and now it's almost beginning of May '08 - that's close to 8 month...they told us something between 10 - 12 weeks ! Yeah, right !! I am not sure, but we pay interest on the IP like mad and we can't do anything to get tenants in. I have talked to the supervisor and he said he will do anything to get it finished asap. Yeah, right ! 2 weeks without doing nothing ! It's very close but we can't have tenants in there yet. I am not sure what the "normal" timeframe is. It's a big house but because we are not local there they take advantage and think they don't see it anyway.... they are 3 houses in this estate from the same builder and all the neighbours say the same ...: Incredibly slow. Some houses are already finished and people live in there and they have started later than our's... It's insane.
Who was saying that buying land and small development is a great thing? Okay, we have already $120K equity in there but I WANT TENANTS to offset my costs.

Anyway! Thanks for your help guys....and that I could write down this stupid story ...
Are you saying its taken them 6 months to finish off or 6 months in total to build? That is not an unrealistic timeframe. Perhaps Qld's have been spoilt by efficient builders in the past?
I was under impression that it takes 2-3 months to build a house. 6-12 months for a block of units.
Im assuming that you havent paid them in full because the job isnt finished.

If thats the case and they are refusing to finish the job (abandoning the contract) you could use those funds to get someone else in there to fix it for you - although you probably want to have a half hour chat with a construction lawyer first just to make sure you are doing the right thing (ie you have to give them an honest chance to mitigate their screw up).

If you have paid them in full - on the bright side it sounds like there isnt that much more in it and you wont make that mistake again either :p.

But to answer your original question - yes you can sue for not finishing but its probably not worth the biscuit although you might have a go in small claims court because you dont need a lawyer (just make sure you have your facts straight first).

Maybe a good place to start is to tell them they if they dont finish it in 2 weeks time you are getting someone else in to do it and not only will they not get paid - they will be getting a bill in the mail.
u should have a contract clause in contract saying penalty for delays or Liquidated Damages for Delay. I have that for my IP being built, at $250 pw, (my potential rental is $270)
What type of contract did you sign. One supplied by one of the building industry associations (MBA or HIA etc)? Within the clauses of an industry written contract will be a clause worded similar to this " Agreed damages for late completion of the Building works" if nothing is stated in the space the Vic contract has a default amount, but usually the square is filled in to match the rent being paid by the consumer, that way their rent is is fully covered if completion is delayed. In a similar clause the builder can also specify a fee for late progress payments and usually these two clauses will be nearby one another.

All of this is irrelevant if you also gave the builder 12 months to finish the house - which will be another clause in the contract worded similarly to this "Time for completion - building period". Some companies often have their own contracts which are tailor made for their own time-frames and often people don't choose to read the fine print.

The very first thing that you should do if the building period has expired and the house isn't finished is to put all of your concerns in writing to your builder and be nice even though you are frustrated. Give him a reasonable amount of time to get it sorted (2 weeks) and then, if you are not happy, you could then contact the Building Services Authority on 1300272272 and get them to give you some advice on the next best option. They will always try dispute resolution or prevention first as this is the least costly and quickest action to take.

Try to keep your cool; the builder will not be able to apply for the final payment until the final certificate is done by the building inspector. You should have a walk through with your builder and compile a list of any major work that needs to be finished before you handover your final payment; when that happens you will get your keys and he will get his chq so he has some motivation to finish it. Minor maintenance work isn't usually justification to withold the final payment and as long as a list is compiled and signed by both parties as an agreement that this needs to be finished then it is ok to handover the final chq. Being a tenanted property may mean that you encourage the builder to do his best to ensure that the final trades are carefull. I would wait until the maintenance period is over (3 months in Vic) until you do the maintenance period check as it isn't fair to expect that the builder come back every week to fix a squeaky hinge etc (you get my meaning); just let him come back once at the end and fix the lot.

Hope that helps:)
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$120k equity already? That's pretty cool! Sounds as though its a well chosen development site.
When we had our first home built in S.A, Homestead homes took less than 7 months fron signed contract to completed home.
Five years ago our second home along with first i.p. took more than 18 months. - world concept homes. ( they had suggested 8 months total. )

Signed a contract late March 07 with statesman homes and although they said it would take 15 months to complete from signing contract it was actually handed over in February this year. less than 11 months.

Looking for best option for a new build at the moment and am still being quoted 15 months by most.
A few offer 16 weeks guaranteed build time (after paperwork council complete etc, but they are more expensive.)

I understand your frustration. Having tenants in "yesterday" is not soon enough for most of us who build, but your builder sounds fast compared to most down here! All builders claim it is not their organizational skills that are the problem but a lack of tradies! Oh yeah thats right. They've all jumped the border to Brisbane and Melbourne where they actually get paid decent rates!

Regards, Jodie
I was under impression that it takes 2-3 months to build a house. 6-12 months for a block of units.
2-3 months is expecting a bit much I think.
Normal building contract period here in sydney is 26 weeks 6 months
Liquidated Damages in the HIA building contract is somethig like $5-$10 per day. Hardly worth it.

If your builder has used a std HIA or similar contract it usually favours the builder, if he's used his own contract it would favour him more so.

You can try and sue him but I doubt you'll get anywhere.
A very good mate of mine did a knock down and rebuild in Ryde NSW. 26 week building contract with Huxley homes. Took just over 12 months to complete. His holding costs blew out and didn make anything on it.
$550k purchase and $250k house and landscape. Interest n $800k is a killer.

He explored the compensation avenue and came to a grinding halt. Too much outlay for a little chance of a little return.
have to agree with others 2-3months is a bit much to expect

also depends on size of house whether has fences driveway etc

we are currently building and were told 140 days which we are happy with although this means 140 days after ground has been broke usually 3months for a smaller home 85-120sqm although we started the process around dec but nothing official signed untill this year so depends when you signed the actual contract and building was officially started council approval alone takes around the 4 week mark no one can build a house from the day you talked to the builder/s and be finished in 2-3months it's virtually impossible

therefore I do not think you will be able to sue have patience you've got 100k + equity surely that's worth the wait?
progress payments

I found this topic of particular interest as I am currently building (in Adelaide) and found the whole building contract was heavily weighted in favor of the builder.

They state a set number of days that the home will take to build. One figure for a single story and another for a two story home.

Then the next clause says that the builder may chose to extend the building time and then charge me more as prices may go up in that time. I quizzed them on it and got the old "it's a standard contract" line. Being new to all of this I let it ride.

The progress payment schedule was laid out in an easy to understand table.

25% of contract price once slab is completed, then another payment when frames are up, another when roof and brickwork is finished etc.

Strangely enough though, the roof is completed and the brickwork is well under way yet they have not asked for the progress payment for the frame stage.

Not that I am complaining though. That's money I'm not paying interest on. :)

Maybe they'll forget that one completely. I doubt it though!!!
It's all about comprehension! Builders and Consumers.

Building contracts are trying to be more weighted in favour of 'everyone understanding' not weighing towards builder or consumer. You would be suprised how many builders don't understand all of the clauses and the circumstances in which they can be applied...they didn't go to chippy school after passing legal studies after all.

Darren you can negotiate the length of the build; that is why the clause is there. If the market is slow and the builder has put in a long build term, negotiate and don't sign. The clause is there to protect you! Linked with that clause will be the one to say that if he goes over that timeframe he will pay you an 'agreed' weekly fee; also not enforceable if the aforementioned clause didn't exist. That clause is there also to protect a builder from many external factors, one being clients (and there are many) who make that many changes in the course of a build that they inevitable lengthen the build time. These extensions have to be done in an organized way for them to be contractual so read up on your contract so that you understand it.

You would also be suprised how many consumers/investors even, sign a document that they don't understand also, possibly also pass up the option to get a lawyer to check over it for them etc and then get upset when the lack of understanding or comprehension on all sides ends in confusion.

Good builders are easily cut from the flock and experience will soon help you pick the good from the bad. Builders also learn the hard way, poor contract management has sent many a builder bankrupt and some that have had a close call may try to use every clause in a contract to prevent it happening again.

The timeframe between slab, frame and lockup is usually fairly short; it isn't uncommon for us to send in two progress payments at once when the lockup is done, we have even done base/frame/lockup in one hit. They haven't forgotton they are just moving quick enough to know that they are close enough to the next stage to send them both in together probably.

I know that you will see that I/we are builders and think I am biased in this reply, but I think that my replies to other posts have proven I am a fair poster in this regard.
building contracts

Hi Julie,

No I didn't see your response as biased.

I read my contract from start to finish but didn't really have the knowedge or experience to suggest changes.

All in all it seemed pretty straight forward. I just found the whole 'time to build' issue quite interesting.

They state a time frame but then reserve the right to extend that and charge you more for the priviledge.

I don't recall the clause regarding them paying me an agree fee but it has been a few months since I read the contract (several times) so it may well be there.

They seem to be progressing very smoothly. I went away for work and only the slab had been laid, when I came back 17 days later the frame was up, windows in, guttering installed, plumbing done and the roof tiling under way

Can't complain about that.