Project Homes Builder demands money on top of the $4000 deposit when I cancelled

Discussion in 'Legal Issues' started by synthman, 25th Oct, 2009.

  1. synthman

    synthman Member

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    Hi everyone,

    I have been with this forum for a while but this is the first time I post. Can someone please help me with my problem below?

    We paid the remaining of the deposit to a total of $4000 to Clarendon Homes (in Sydney) back in May 2009 for a knockdown and rebuild on one of our IPs. We plan to live in that house when it has been completed. This is our first time building a house.

    We signed a "Deposit Tender" in June. After that, during the external color selection phase, we discoverred some flaws with the designs and requested changes via emails and phone calls. We were aware and fine with the fact that changes after this stage would incur some cost for redrawing etc...

    The process from this point was painful as Clarendon had not been as responsive as the period before we signed the Tender. The feeling has been they tried to talk us out of the any further changes from this point. Some changes were critical i.e. we had an extra car space next to the garage and the driveway was drawn in a way that it would be almost impossible to park a car in the extra car space or the garage on the other end...

    The suboptimal design, the lack of responses and many bad reviews we have read about Clarendon Homes prompted us to cancel.

    We sent an email to cancel in August. At this stage, Clarendon was waiting for us to select the external colors, so the plan has not been finalised and submitted to Council yet.

    We were prepared to loose $4000 as we figured out it would be more important to have a good design and loose $4000 now rather than sorry later as we will have to live in it for a long time.

    We did not expect that Clarendon Homes sent us an invoice asking us to pay an extra $2199.26 to cover their cost to this point.

    The invoice lists the following items:
    Surveyor: 1565.30
    Energy Assessment: 330.00
    Engineer: 1441.00
    Water Authority: 273.46
    Private Certifier: 544.50
    Stormwater Consultant: 605.00
    Administration Fee: 1000
    Total: 6199.26
    Paid: 4000
    Invoice Amount: $2199.26 to be paid to Clarendon Homes.

    My question is is it fair and legal that Clarendon can demand this amount of money on top of the deposit of $4000? Do the list of items they had spend my money on look reasonable? There were no real invoices, they just typed up a list with the amounts and the list looks exactly as I have pasted it above.

    We have lost $4000 and a lot of time. Clarendon too but $4000 deposit should legally cover this cost? That was legally, morally, I beleive the $4000 has not been spent as it is meant to cover council submission to approval but the plan has not been submitted so Clarendon should respect consumer's choice not to choose them and refund us back the unused money.

    Has anyone gone through the same thing before and can give me some advises. Is what Clarendon Homes demanding correct?

    P.S we are now looking at building with another builder (paid another $4000 with this builder) and I did tell Clarendon about this.


    Regards
     
  2. Propertunity

    Propertunity Real Estate Buyers Agent

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    synthman,

    You are getting out of it cheaply. Pay up and move on would be my advice.

    I know the project building industry very well having consulted to it for nearly 15 years all over Australia & NZ.

    It is very easy for them to justify the amount they are seeking form you. It would have cost them more than that to get you to this point.

    You have to understand the process of how a project homes builder works. Once you start to vary the 'standard design' then it puts a whole new layer of cost into the project. They keep prices low and profits low (per house) by doing volume. Once you change anything, i.e. a bathtub size, that means they have to reji the bathtub order, rejig the subcontract order to the subbie installing, the waterproofer, the tiler, the plumber etc - it just is a big PITA for them - so they charge you a premium for the inconvenience.

    Telling them you have moved builder will not help you with your cause - they have nothing to lose now they have lost you.
     
  3. BV

    BV Think outside the square

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    synthman
    It's impossible for you to prove otherwise, but I'd try tackling this the friendly way.
    The costs would have been worked out by an office admin person.
    Get on the phone to their manager and explain the situation, tell him how much you were inconvenienced by their delays etc and he/she might let you get away with it.
     
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  4. rugrat

    rugrat Member

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    agree with prop 100%
     
  5. Perp

    Perp Member

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    I'm not familiar with project home building, but you are in breach of the contract and thus not in a strong bargaining position. I should think that if you don't pay this, they could sue you for it, and then you'd be up for their recovery costs on top of these costs.

    Given that they've outlined exactly what costs they're claiming, I should think they'd be able to successfully pursue a claim against you.
     
  6. Sheryn

    Sheryn Member

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    Cheap price to pay to get out of a contract, can't believe you signed with another builder before cancelling first contract.

    Sheryn
     
  7. NedKelly

    NedKelly Member

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    There is $440 missing.
     
  8. synthman

    synthman Member

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    Is the Deposit Tender a contract? Don't take me wrong, I appreciate thoughts from everyone so far and I am trying to look at this from the builder's angle.

    My problem could be that I did not have the understanding that the Deposit Tender was a contract. Only when I sign a Building Contract then it becomes a contract.

    I am only a beginner compared to most people on this forum (people like Propertunity, BV etc...whose posts I read with respect) but if I could relate this to the process of buying an IP. Assume the vendor has accepted your offer, you pay a 0.25 deposit with a 5 day cooling off period. Before the period expires, if you change your mind, you loose the 0.25%, if you change your mind after the 5 day, you loose 10% of the purchase price. When you change your mind in this case, a number of parties would loose financially as well i.e. the RA looses his time, the owner looses the opportunity to sell to another, I loose my time and effort but wouldn't it be how the business works? I understand that the "seller" may not like this but the "buyer" needs to be protected that in the worst case he/she can still pull out, move on and compensate by loosing the legal deposit only?

    P.S I know of cases where the builder (the same builder) let the "buyers" go and did not ask for anything extra and in these cases, the DAs had got much further than ours i.e. council already approved...Is my case a singled out one?
     
  9. Propertunity

    Propertunity Real Estate Buyers Agent

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    What were the T&Cs on the deposit tender that you signed? (Paying money and signing, sounds like some kind of a contract to me - even if it wasn't a building contract)

    No you can't compare this process with the purchase of RE which is regulated by entirely different legislation.
     
  10. synthman

    synthman Member

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    Hi Propertunity,
    It has a list of items that the builder will include in the house i.e. slab, allowances for BASIX, Council fees, Variations that we have requested, the cost of each item and how they are summed to the total cost to build the house.

    The last page has these T&Cs (what a test to my typing skill!):
    Our Tender, including your selected house design, site costs, anticipated COuncil Conditions and requested variations is (x$ in words).
    This Tender is subject to the client entering into a Building Agreement (which will be the HIA Edition 4 Plain English Agreement together with the additional Sepcial Conditions attached and marked "C", "D", "E", "G" and "I" and General Specifications attached and marked "H") with Clarendon Homes (NSW) Pty Ltd.
    We hereby accept the Tender for x$ and approve the proposed home siting as shown on the attached site plan and authorise Clarendon Homes to proceed with the preparation of Working Drawings and assosicated Buidling Agreement.

    We understand that by making a further payment of $3200 (bringing the total deposit amount paid to date to $4000, which is non-refundable deposit), this will facilitate the preparation of Working drawings and preparation of the home Building Agreement and that this amount forms part of the total tender amount of x$.

    We acknowledge that the price of the Home will be held firm except for variations, any spcial Council or Thermal Report requirementws and any Waterboard requirements, provided:
    - This tender is accepted within Fourteen (14) days of the tender date.
    - Clarendon Homes (NSW) Pty Ltd have received the Council approved plans and Waterboard approval within One Hundred and Twenty (12) days from your intitical tender date 28 May 2009.
    - We understand that the list and facade price and promotional offer are fixed unconditionally for One Hunderd and Eighty (180) days from the acceptance date, being 24 November 2009.

    Claredon reserves the right the review the List, Facade and Promotional offer pricing after this date.

    (mywife and I signed here on the 30/06/09...).

    That's all, there were not other T&Cs or papers that we have signed.
     
  11. willair

    willair xx

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    Go back to when you started, and have a look at the contract you signed with the company, a common law contract only has 8-10 elements that stand out and will stand up in a court of "LAW",after all a contract signed in black and white is a legally inforceable $$$$ agreement,no in betweens both parties have to stand on that agreement,other wise someone will pay the price,"IMHO",from my small experience the money the are asking for if not paided will soon skyrocket into a larger bill very quickly,and you will be left holding the can..imho..Run it past your legal team..willair..
     
  12. synthman

    synthman Member

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    NedKelly, thanks for spotting this out. That was my bad, there is a $440 being for Drawing Cost.
     
  13. Propertunity

    Propertunity Real Estate Buyers Agent

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    It might be a try-on then or something is hidden in these special conditions??
     
  14. synthman

    synthman Member

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    Hi Propertunity,
    We have not seen the Building Agreement (BA) and it's attachments. My understanding is that the BA is to be signed after Council's approval. At that point, the builder will include any variations/requests from the Council and we will have to pay additional money to make up a total of 5% of the tender price. That point is where I understand we have enterred a building contract with the builder.
     
  15. craigb

    craigb craigb

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    there is so much organising going into the desighns and siting phase , that the costs incured to you are rather cheap , if you realy want out pay it as they have taken it on as good will the contract will go ahead , and now that you have changed your mind has wasted alot of folks time , just pay it,
     
  16. rugrat

    rugrat Member

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    The truth is that unless the is something in the contract spelling out that you will NOT be liable for the costs incurred, then most likely it would be reasonable to assume that you are. These expenses were inncurred on your behalf, they are reasonable (not OTT high) and 'if' this were to be taken before the courts it is likely you would end up paying at least this cost as well as their legal fees.

    Of course I am just a stranger on the internet, if you really don't wish to pay this amount seek out some professional legal advice (but be aware, such advice may cost nearly as much as the alledged outstanding amount - the biggest flaw in the legal system IMO is the expense involved).
     
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  17. synthman

    synthman Member

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    It seems that the majority think that I should pay up as they have incurred cost on my behalf. Fair enough and I am considering your suggestion seriously and carefully.

    But on my side, what about I requested a change to the design of the drive way and it was knocked back? How we are going to park the cars (or we may still be able to but with great inconvenience day after day)? What about they only guarantee a fixed price for 180 days but took a few weeks to respond or even did not repond to emails or phone calls?

    I am not saying I won't pay up, may be I will as a gentlement gesture and to move on from here but I am trying to make sense out of this. I work for a business where we welcome customers to come in, have a cup of coffee, chat to staff, consume staff's time to inquire about products etc... We can not really say because the customers have incurred a cost but not purchased anything, the customers should pay some money to visit us. Then after they've purchased, the customers may change their mind, they can still get a refund, provided that the whole transaction complies with our policies.
    000
    The point is the customers don't buy because there are reasons and we will work to address those reasons in order to make us more competitive. In my case with this builder, the reasons were because I was not happy with the design and the outcomes of my requests for changes. If there were not those issues, I would not have cancelled.

    If $4000 is not enough to cover the cost then the company's policy should change and ask for a deposit of $6000 or more and allow the customer to go freely if for some reasons the customers no longer wish to proceed. The deposit then can be kept to cover the cost. The customers should not have to worry about if they change, what other unexpected cost the builder may come up with.

    I have fed back through the sales department and I am waiting for the manager to comment.
     
  18. rugrat

    rugrat Member

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    Synthman - you are quite possibly right in regards to how they should run their business, but remember you were backing out of this deal with them because you weren't happy with them, why would you expect to be treated any better when you are no longer a client anymore. Personally, if I were in your position I would be miffed too, and I would probably argue with them a little about the money, to see if they may be willing to back down -but in the end I would probably pay up. But in truth I wouldn't have surprised to be billed with these costs.
     
  19. synthman

    synthman Member

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    Hi everyone,
    I am pleased to report a happy ending to this story. Just before Christmas, Clarendon Homes sent me a letter advising that I did not have to pay any extra money on top of the $4000 deposit.
     
  20. 888

    888 Member

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    Congrats synthman, I be interested to know what exactly you said to the manager to be able to get the extra cost waived.