What is Practical Completion

Hi all,

I'm buying a new house from a friend (not exactly) of mine. The house is on the verge of completion barring few items such as:
1. approx 50% fencing
2. Carpet in lounge
3. Few taps in laundry
4. Gas water heater
5. Rendering of front porche
6. Upgrading Euro rangehood to Westinghouse
7. Removal of some debris from the site

Vendor (my friend) is in a hurry for the settlement. He is taking the handover of "Practical Completion" from his builder tomorrow and is insisting that I should go for the settlement day after tomorrow.
The contract says that we will settle within 7 days of practical completion. While signing the contract, I had no idea that the practical completion certificate can be issued without completing the above mentioned items but vendor says that 'practical completion' means house is habitable. He is also saying that his builder will complete the pending items within 2 weeks but not giving any guarantee.
What should I do? Help appreciated.:confused:

Regards
 
What is the monetary value of these items? If the price was to increase this much, would it still be a good deal? How much do you trust your friend? Most builders are contractually obligated to finish to a set standard, and are required to fix anything covered in their warranty for a certain period of time.
To my mind, the items you have mentioned dont seem that expensive, worse case scenario if you have to pay for them out of your own pocket and then chase your friend/ or the builder would it spoil the friendship? If it would, then explain that to your friend and ask him to get the builder to explain how thier warranty works.
 
do you have a solicitor to do your conveyencing? If not get one, and ask them about it. Honestly I hve never heard of 'practical completion' before - but then I am reasonably new to the game.
 
"practical completion means when the building works are complete exept for minor omissions and defects that do not prevent the building works from being reasonably capable of being used for their usual purpose" - hia std contract
 
1. approx 50% fencing
2. Carpet in lounge
3. Few taps in laundry
4. Gas water heater
5. Rendering of front porche
6. Upgrading Euro rangehood to Westinghouse
7. Removal of some debris from the site

Your friend may be in a hurry BUT you have 7 days.

I would expect that all of the above could be completed in one day, usually builders give a 'hurry up' message to their subcontractors.

No way would I settle on contract if GAS HOT WATER is not working.

I have previously settled before carpet fully installed eg. rolls of carpet were in house ready to be laid.


Regards
Sheryn
 
I have just signed off on a unit after PCI. I went through with the building supervisor and the we both got copies of the minor defects and work to be finished. In 10 days I will be back to check it has been done and get the keys.

I am new to this too but seems like this is how it's done round here.
 
sanjayag,

The sceanario seems a bit weird.....but I wont delve into it any further. All I can say is that I hope your friend is not getting any money for being the middle man...Why would he be trying to onsell it to you prior to completion. The only reason I can think of is that he is wanting to make a quick buck prior to handover. (What type of friend does this)

If the HIA Domestic Building Contract is between the builder and your friend, then I wouldn't do anything. You don't have any authority in talking about any defects if the builder doesn't have a contract with you. He doesn't care who might buy the property in a few weeks. Your friend should follow what is in his contract, and ensure that a final, pre handover inspection is arranged and carried out prior to the handover date. If your friend consider that there is more than 'minor ommissions' left out or not done, he can write to his builder and state this (it is all discussed in the contract....you should get your hands on a copy of it as well) This also gives you a bit more time, as the PC date has to be arranged again. (I had this exact scenario, and all landscaping, turfing and fencing was excluded at handover. Even though the house was certainly habitable, I didn't consider that the turfing, landscaping and fencing to be 'minor ommissions'. So I just follwed the contract (and wrote the appropriate letter to the builder contesting this) and waited until this was finished prior to handover. (equated to around $15000 of unfinished work)


The handover inspection is an opportunity for your friend to:

1. check the house thoroughly for defective and missing items (and anything else i.e. turf laid, post box installed, clothes line up, painting finished, etc)
2. make sure you receive from the contractor a list of minor defects and omissions (signed by both parties)

This 'snagging list' is to be completed within7 or 10 days (not too sure) The builder needs to put an actual date on the snagging list. (i.e. 7 days from PC)

It does seem a bit unusual, but Practical Completion refers to the stage when the works:

1. have been completed in accordance with the contract and all relevant statutory requirements apart from minor defectsor minor ommissions and
2. are reasonably suitable for habitation.

With regards to a final inspection, if you are not 'building savvy', I would advise you to engage a building inspector in order to carry out this final inspection. All for about $400, they hop up on the roof, crawl through the ceiling and do a thourough check on the building structure. Money well worth spending. They produce a very detailed report (generally two reports....... one complete report for you and a builders defect list report....for you to send onto your builder)

Hope it all gos well, and hop back on and let us know how you went.:)

As another poster suggests, without knowing your background, might suggest that legal and financial advice should also be sought.

Cheers,

F
 
Thanks everybody.
The vendor has taken the Practical Completion certificate from the builder.
Builder has connected the gas hot water service and has completed the other minor pending items. Only fencing and front porche rendering is incomplete......for which we are holding 5k in a trust.

Regards
Sanjay
 
mate im having a hell of a time getting defects repaired under home builders warranty because noone can find the practical completion certificate to verify who actually completed the work, so in my opinion you need that if ever future issues arrise that you need to claim under home builders warranty to prove who actually finished the work and they signed off that all work meets astralian standards
 
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