My fixed price contract was only fixed until the builder wanted more

[redrock]

Here's our story, We decided to knock down the family home and build 2 units on the block, one to live in and the other to sell.
We found a builder and signed a contract for him to demolish our home and build the 2 units, after knocking down our home he tells us that he has neglected to add in the price of one of the slabs and we will now have to pay him an extra $27,000 or he will walk away from the project.

Since then he has continued with the build but is demanding that we pay for his error , we have offered him some money to help him out but he is still bitter and does not believe he should be liable for any of the cost.

We would like to get others opinions on what we should do to insure that our build is done properly considering that we are now dealing with an angry builder who will not accept that it is his fault and that he should be grateful that we are offering him anything .

 

[Aaron_C]

Well it's called a fixed price contract for a reason. Honestly he can go to hell.

 

[Colin Rice]

The definition of a contract sums it up!

con?tract
/ˈk?ntrakt/
Noun
A written or spoken agreement, esp. one concerning employment, sales, or tenancy, that is intended to be enforceable by law.

Granted you are in a delicate position as he will be responsible for the completed product. Maybe negotiate a cost price on the slab to keep him on side?

Consult the Vic Building Ombudsmen to see if they can assist? http://www.ombudsman.vic.gov.au/resources/documents/Building_Commission_-_advice_sheet.pdf

 

[D.T.]

Definitely discuss with ombudsman and /or take your contract to a lawyer for advice.

The last thing you want is an unhappy builder building your home because he won't put any effort into it. You rectify this by making him happy or replacing him, dependant on the advice from above.

 

[TMNT]

these sort of people with no self respect, absolutely **** me off beyond a joke,

its a fixed price contract unless there is a clause that says he cant ask for extra for whatever reason

if I had all the time, money and resources in the world, I would not pay him a cent anymore and assuming you havent paid more then the work he has done, and remove him from the job, and let him try and sue my a$$

and then id make sure he never got another job again

 

[Scott No Mates]

Definitely discuss with ombudsman and /or take your contract to a lawyer for advice.

The last thing you want is an unhappy builder building your home because he won't put any effort into it. You rectify this by making him happy or replacing him, dependant on the advice from above.

Do not go to just any lawyer or your normal practice lawyer. By all means contact yours for a recommendation to a construction contracts specialist lawyer who can advise more effectively than your own solicitor's practice.

 

[Ausprop]

been in your shoes before and it isn't easy, the practicalities of proceeding with a build whilst litigating are not great. In my case add in a family contact and it's even worse. concreter stuffed up his numbers so I went with his low cost, the builder credited me back a low cost, then the add back for the concreter was way higher than what the builder would have charged in the first place - everyone had a field day at my expense.

getting another builder to take the project on half way thru will not be pretty either.

feeling your pain here... builders are cunning creatures

 

[Tano]

I signed a fix lump sum building contract with ross north and we had to pay 7 variation for site costs(which were fixed) . Once the first one (4k to remove white pvc sprinter pipe underground - lol) came through we handled it very aggressively and they backed down. A few days later another one showed up and we gave in and paid. We will never build with them again.

We paid a heap more for the fixed price contact over the standard variable contract they offer

 

[Aaron_C]

The key is to check what are prime cost items, allowances and variations. These are the figures that will hurt if you get the estimate wrong for say site works.

 

[redrock]

Thanks for everyone's advice, it is not going to be easy to continue with the build depending on the builders attitude. It would have been easier if it didn't happen until near the end of the build but unfortunately for us it was a problem right from the start. I was excited about building, not anymore this is very stressful and not fun at all. I don't know how so many of you can ever face up to doing a second development.

 

[Sheryn]

People do make mistakes

Redrock

Discuss options with your lawyer, you signed a contract in good faith and take it from there.

An experienced builder would know approximately how much the build was going to be by the square metreage of the 2 units and should have checks and balances in place when estimating if a simple build.

A good outcome would be to meet half way since it was not your fault but I would take my time and stretch things out.

Friend of ours was hit with 48K variance bill a few years ago on a complex build which was basically the builder's way of trying to recoup some losses for things he did not include in the contract.

I would be nosey and say something like 'Our lawyer will need to see all the bills for our job before we can consider meeting you half way'.


Cheers
Sheryn

(There are a lot of construction companies that go bust...as there are a lot of variables in building)

 

[RightValue]

Redrock,

Pay the $27K, the deduct it from the final progress payment claim once the build is done and the C of O has been issued (never pay the final until all work is done and C of O is in hand).

If they do not give you the keys, just get a locksmith or drill the lock and change it yourself. You probably will not have appliances (cooker, range hood, dishwasher and HWS in place, but these cost way less than $27k.

 

[BMan]

as RV said pay the 27k now to keep him happy but then dont pay it at the end of construction. just pay up to the fixed price of the contract

 

[TMNT]

Redrock

Discuss options with your lawyer, you signed a contract in good faith and take it from there.

I may be nitpicking, but I dont see a contract as good faith, I see it as a contract, the builder expects you to pay, so as a buyer fulfilling your obligation to pay isnt good faith,

good faith to me is when the builder says "I know ive agreed on medium quality wood, but Iahve a contact who can get high quality wood for the same price, ill try and use that, if not ill use the normal stuff"

 

[TMNT]

Redrock,

Pay the $27K, the deduct it from the final progress payment claim once the build is done and the C of O has been issued (never pay the final until all work is done and C of O is in hand).

thats great advice, has anyone done this before??? obviously if the amount is large like $100k, there is more chance and opportunity for the builder to stop consutrction or refuse to do bits that you cant do or recitfy yourself, but since changing locks might only cost a few hundred

Redrock,
If they do not give you the keys, just get a locksmith or drill the lock and change it yourself. You probably will not have appliances (cooker, range hood, dishwasher and HWS in place, but these cost way less than $27k.

how come? if you've paid the $27k theyve asked for, they would think all is peachy and finish the job, so why wouldnt the appliances be there? especailyl if the C of O is issued

 

[MTR]

thats great advice, has anyone done this before??? obviously if the amount is large like $100k, there is more chance and opportunity for the builder to stop consutrction or refuse to do bits that you cant do or recitfy yourself, but since changing locks might only cost a few hundred


how come? if you've paid the $27k theyve asked for, they would think all is peachy and finish the job, so why wouldnt the appliances be there? especailyl if the C of O is issued

I doubt this would work and I certainly would not do this, all the builder needs is evidence that he advised the client of the increase in build and client agreed, the fact that the builder continued building may be seen as enough evidence. If it went to court the client would then be liable for this. I would expect the builder will now send revised/amended building costs/contract.

I would seek professional help, a lawyer that deals specifically with building contracts and find out what you can and can not do.

MTR

 

[MTR]

been in your shoes before and it isn't easy, the practicalities of proceeding with a build whilst litigating are not great. In my case add in a family contact and it's even worse. concreter stuffed up his numbers so I went with his low cost, the builder credited me back a low cost, then the add back for the concreter was way higher than what the builder would have charged in the first place - everyone had a field day at my expense.

getting another builder to take the project on half way thru will not be pretty either.

feeling your pain here... builders are cunning creatures

So what happened at the end??? How much more did it cost and why did you have to pay up if it was a fixed contract, was there something in the contract that gave them an out???

 

[Snoopy]

I would find out where you stand legally 1st - exactly what is in he contract and how he is asking for the extra.

Then I would try and find a commercial resolution - this may require you to show that you are going to go legal without actually doing so. Keep track of your communication in writing by using e-mail.

If you end up in court you both lose.. Maybe he can do some extra work for you for a lesser amount, take a lesser amount or mixture of things

 

[RightValue]

how come? if you've paid the $27k theyve asked for, they would think all is peachy and finish the job, so why wouldnt the appliances be there? especailyl if the C of O is issued

In Melbourne the appliances are almost never installed until the day of handover when the client pays the final instalment. This is due to theft. If they are installed prior to handover and they are stolen the builder is liable.

Also to the OP, I had another thought.

If this $27k is a variation, then variations are paid at completion not at the end of the contract.

Also if you are relying on a bank to fund progress payments then the bank should be unlikely to fund this payment.

 

[TMNT]

In Melbourne the appliances are almost never installed until the day of handover when the client pays the final instalment. This is due to theft. If they are installed prior to handover and they are stolen the builder is liable.

Also to the OP, I had another thought.

If this $27k is a variation, then variations are paid at completion not at the end of the contract.

Also if you are relying on a bank to fund progress payments then the bank should be unlikely to fund this payment.

ahh i see, very good!