first time builder questions. QLD

[eggnog]

Later this year I will be doing my first ever build. It will be a house in brisbane. There is a bit of trepidation as I dont quite know the process to follow for building a house. But at the same time I am also excited.

When I have selected a builder should I get a lawyer to look over the contract before signing? (sort of like convayencing when purchasing a house).
Is there any particular insurances I should take out? (like I did for home insurance when purchasing established properties).
Any other tips to do would also be helpful.
Cheers.

 

[Perp]

When I have selected a builder should I get a lawyer to look over the contract before signing?

I've signed a building contract recently, and I got pre-contract advice, and apparently I'm the exception. I was glad that I did as our lawyer found an issue that would have invalidated our QBCC warranty insurance had we signed.

I happily recommend Doug Skelton, a Brisbane-based licenced builder and lawyer.

With regards to insurance, the builder insures the site for the duration of the build. You may need insurance to cover public liability prior to the builder's insurance starting, then you'll need standard home and contents insurance when you take the home back at the end.

 

[Melbournian]

I've signed a building contract recently, and I got pre-contract advice, and apparently I'm the exception. I was glad that I did as our lawyer found an issue that would have invalidated our QBCC warranty insurance had we signed.

I happily recommend Doug Skelton, a Brisbane-based licenced builder and lawyer.

With regards to insurance, the builder insures the site for the duration of the build. You may need insurance to cover public liability prior to the builder's insurance starting, then you'll need standard home and contents insurance when you take the home back at the end.

What was the issue regarding the invalidation of the warranty insurance.

As for public liability, The insurance would normally be issued prior to the building permit so they would be unable to start anyway.

 

[Perp]

What was the issue regarding the invalidation of the warranty insurance.

The proposed payments schedule would have had us paying ahead of the value of the completed works, which invalidates the warranty insurance.

So the QBCC insurance is designed to protect you in the instance that, say, you've paid your deposit and the builder goes bankrupt before doing anything - you can get your deposit back.

After the deposit, you're not supposed to ever be paying "ahead", so the project should be 10% complete when you pay 10%, then 20% complete before you pay 20%, and so on. If you do that, and the builder goes broke, the QBCC insurance protects you against increased costs of getting another builder to complete.

e.g. Say you've had 40% complete, and paid 40%, and the builder goes broke, but you have to pay another builder, say, 70% of the project value to complete it. The insurance covers the 10% cost over-run.

But if, in the same situation, you'd paid 50% and only had 40% of the project complete when the builder went bankrupt, then the insurance payment wouldn't be the 70% required to finish, but only 60% (or less), because you'd voluntarily paid in advance, and payments in advance aren't covered.

As for public liability, The insurance would normally be issued prior to the building permit so they would be unable to start anyway.

Public liability for other entrants prior to the build commencing, e.g. trespassers or mailmen or visitors etc.

 

[eggnog]

Thanks Perp. That's some very useful advice. Can I ask how much it costed you for your pre-contract advice? You can pm price if you do not want to post it on an open forum. Was it from the same law firm you are recommending?

 

[Melbournian]

The proposed payments schedule would have had us paying ahead of the value of the completed works, which invalidates the warranty insurance.

So the QBCC insurance is designed to protect you in the instance that, say, you've paid your deposit and the builder goes bankrupt before doing anything - you can get your deposit back.

After the deposit, you're not supposed to ever be paying "ahead", so the project should be 10% complete when you pay 10%, then 20% complete before you pay 20%, and so on. If you do that, and the builder goes broke, the QBCC insurance protects you against increased costs of getting another builder to complete.

e.g. Say you've had 40% complete, and paid 40%, and the builder goes broke, but you have to pay another builder, say, 70% of the project value to complete it. The insurance covers the 10% cost over-run.

But if, in the same situation, you'd paid 50% and only had 40% of the project complete when the builder went bankrupt, then the insurance payment wouldn't be the 70% required to finish, but only 60% (or less), because you'd voluntarily paid in advance, and payments in advance aren't covered.

Public liability for other entrants prior to the build commencing, e.g. trespassers or mailmen or visitors etc.

lucky you had a building lawyer check it out. totally agree with you on this. they only can pay up to the stage completed. i have build numerous times before.

i normally used the HIA standard building contract that is compliant in terms of base, frame, lockup, fixing, completion stage payments Banks nowadays if the loan is under construction have building inspectors at each stage before they release the funds.

Also, if they take excessive payments as in what you have said, the whole contract can be considered non-compliant and can be considered void. there is a formula to work with the various stages. i normally put 30% at the completion stage which has in the past upset the builder to the point when he wanted addititonal payments. but i have always said no.

I suppose if it is an exisiting house there would be existing insurance and with vacant land - yes you would have to.

 

[Perp]

Thanks Perp. That's some very useful advice. Can I ask how much it costed you for your pre-contract advice? You can pm price if you do not want to post it on an open forum. Was it from the same law firm you are recommending?

It was from Doug, yes. Budget $500-1,000 for contract review.

 

[eggnog]

Hi again Perp.

Do you know which insurance companies provides public liability for the interim period between when a house is knocked down and home insurance forfeited to when the builder starts and their builders insurance kicks in.

 

[Perp]

Hi again Perp.

Do you know which insurance companies provides public liability for the interim period between when a house is knocked down and home insurance forfeited to when the builder starts and their builders insurance kicks in.

No, sorry. I got the demolition done by the builder, precisely so that it would be covered by their insurance.

Also prevents the builder and demolition company arguing about precisely how they want the site prepared for building.

 

[eggnog]

That's a good strategy. Thanks mate.