Can you protect against your builder going broke ?

Hi all.
Things are looking a little iffy around the world and it has me thinking.

I'm ok with dropping prices( 20 year + hold time for me)
I'm ok with cash flow.( have buffer and a 15 year gov contract for work)

The one thing that might derail my current development is the builder going bust part way through the build.

Is there any way to protect yourself from this ?
Can you insure against it ?
Can you get info on the builder ?
Obviously the builder says all is great but I would like to cover my but as well as I can before I sign the contract.

Any info ???
 
I would have thought that only your initial deposit was at risk. After that you are only making progress payments as the build progresses. If the builder goes belly up then you have only paid for what has been done.

In the commercial world, some clients request a bank guarantee or deposit from the builder.

You can do a Dunn & Bradstreet on the builder.
 
I think the biggest challenge is finding an alternative builder who will finish the job for the price that you've been quoted.
One of the reasons businesses go bankrupt is that they dont charge enough to cover their costs. If they do, then you should expect a significant increase in the costs if being done by a builder who is in a more stable financial situation
 
Hi all.
Things are looking a little iffy around the world and it has me thinking.

I'm ok with dropping prices( 20 year + hold time for me)
I'm ok with cash flow.( have buffer and a 15 year gov contract for work)

The one thing that might derail my current development is the builder going bust part way through the build.

Is there any way to protect yourself from this ?
Can you insure against it ?
Can you get info on the builder ?
Obviously the builder says all is great but I would like to cover my but as well as I can before I sign the contract.

Any info ???

Just make sure they have Builders Indemnity/Builders Warranty insurance.
 
One of your best options apart from Home Warranty Insurance (Builder Takes Out). Of course getting the monies out of the Building Authority if the builders goes pair shaped is another matter all together.

Apart from all the searches etc make sure you get all the certificates for surveys, soil test, certifiers engineers etc etc as the building progresses even if they are copies.

If you have to get another builder to finish the project much easier if you have these. If you don't have these or able to get hold of them you will enter into the path of a lot of extra cost and no garrantee to get a result.

I am loath to take on other peoples work and the contract has to be written in a way as you (builder) are not responsible for work that is already carried out and this would have to be listed and documented even photos. To me its not worth the effort involved, for a start the owner is already angry (rightfully so) and most likely has a distrust of builders now thinking they are all sham opperators and the working relationship is hard to build on.

All I can say really is do your research and ensure you have plenty of open communication with the builder.

Brian
 
I tend to be wary of builders who take their money after the house is built.

If they aren't collecting cash along the way they can get themselves into serious trouble.

Personally, I'd only deal with a builder who I was confident had plenty of cashflow.
 
I tend to be wary of builders who take their money after the house is built.

If they aren't collecting cash along the way they can get themselves into serious trouble.

Personally, I'd only deal with a builder who I was confident had plenty of cashflow.

I'm a bit confused why are you wary of a builder who wants thier monies after the house is built:confused: If the owner did not want to pay me when I was complete I would not be happy chappie. If you have a contrat in place it will detail the time lines for payment of monies as you build.

How do you really know if a builder has plenty of cashflow?

Brian
 
well you'll never know exactly how much cashflow the builder has...nor what type of projects he is working on, the scale of those projects or the frequency of payments from these projects...builders generally go bust if they've overextended and taken on too many projects and the cashflow dries up from one client, stuffing up everything else
 
Like he said.

To me it means if the builder over extends, or has too many delays they will run out of money. So if they're delaying payment they could run into trouble when a local market turns.
 
Back
Top