Who reads through your development contracts??

[Cruskits]

Hi All,

We have a development block that we bought in Scarborough, W.A. in August '12.....

After what felt like an endless amount of DD we have chosen a builder and have had plans drawn up, they are now in with council (3 weeks now).

We have met with the broker for a pre-approval and we get confirmation back next Thursday give or take a day or two. He gave us a verbal to go ahead and start proceedings after we gave him our initial thoughts on building 6 months ago.

Once we get formal approval next week I'll make contact with the builder and we can start to nut out the contract (we know the ball park figure but need to get it down in a contract so we know exactly where we stand.)

I got a couple of questions:

1. Who do you guys get to look over the building contract?? Solicitor, another builder, friend, family????

2. As part of the DD after seeing the accountant I have a good idea of costs once built including GST, CGT etc. etc. if we were going to sell or whatever. However if we hold and hopefully we will, do you think if I took the building contract to the accountant that they would be able to give me an idea of what the depreciation might be for a taxable year on the new build???? so I could include this into my figures. I reckon I could come up with a ball park figure but is there any way I could get a more accurate figure??

Obviously there are other tax benefits (for now, hows all the talk in the news re: negative gearing, we all have our own opinions about that) but yeah can the accountant help out with the depreciation based on a build contract??

Cheers everyone

 

[WesternRat]

they don't use a standard HIA contract? that has most bases covered, and is relatively fair for both parties if there are no shenanigans.

'course if the builder tries to pull a swifty, you will still have to be quick on your toes (went through a relatively standard build here, but builder tried some quick ones thinking we wouldn't notice, reading through the contract saved the day and they backed down to the tune of thousands)

 

[Scott No Mates]

If they offer to use a standard Master Builders/Aust Institiute of Architects or HIA contract - just have your solicitor have a look at it (preferably have one who handles building issues rather than conveyancing/wills etc). If the builder is using their own contract - RUN..... oops request that they use the standard form contracts.

Have a QS go over the plans/spec rather than your accountant.

 

[Cruskits]

Cheers lads....

 

[westminster]

Hi All,

We have a development block that we bought in Scarborough, W.A. in August '12.....

After what felt like an endless amount of DD we have chosen a builder and have had plans drawn up, they are now in with council (3 weeks now).

We have met with the broker for a pre-approval and we get confirmation back next Thursday give or take a day or two. He gave us a verbal to go ahead and start proceedings after we gave him our initial thoughts on building 6 months ago.

Once we get formal approval next week I'll make contact with the builder and we can start to nut out the contract (we know the ball park figure but need to get it down in a contract so we know exactly where we stand.)

I got a couple of questions:

1. Who do you guys get to look over the building contract?? Solicitor, another builder, friend, family????

2. As part of the DD after seeing the accountant I have a good idea of costs once built including GST, CGT etc. etc. if we were going to sell or whatever. However if we hold and hopefully we will, do you think if I took the building contract to the accountant that they would be able to give me an idea of what the depreciation might be for a taxable year on the new build???? so I could include this into my figures. I reckon I could come up with a ball park figure but is there any way I could get a more accurate figure??

Obviously there are other tax benefits (for now, hows all the talk in the news re: negative gearing, we all have our own opinions about that) but yeah can the accountant help out with the depreciation based on a build contract??

Cheers everyone

Note:
- do make your HIA contract subject to finance. Pre approval doesn't guarantee finance and you don't really need to do it.
- if you are with Stirling Council then it will sit in the DA queue for 60 days then it will be assigned to someone. By the time it's approved it maybe more than 90 days and I think most preapprovals only last that long? I could be wrong.
- I assume you have a quote from the Builder at the moment? Not much will change from this for the HIA contract - it just has terms around that quote. This together with a specification addendum will be the basis for what you receive. Ensure that your HIA contract specifies the addenda that forms part of the contract.
- do check the part of the HIA contract that states how many days the builder has to go to site - you don't want it ridiculously long.
- do check the number of days the Builder has to complete works
- do feel free to add things to the HIA contract but of course the Builder needs to agree with that. You can add things like "an independant building inspector will be inspecting this site at stages x and Y. The defects found in the report will be fixed within xxx days or at an agreed time between Cruskits and Builder"

As to depreciation this can be done from the addendum/specifications and working drawings and the Accountant or QS can do this. Working drawings won't be done until you have DA and they take around 4 weeks to produce post DA.

 

[Cruskits]

Westminster,

Thank you for taking the time to reply.

When you are young, eager and inexperienced it is so easy to overlook some things that are integral to a smooth(er) development. A lot of the points you have mentioned I hadn't even thought of. Obviously people go through this process, make mistakes, learn from them and go again. However the chance we have to get an insight and learn from others experiences, with access to invaluable resources (SS users) through an amazing website (Somersoft) is priceless.

- do make your HIA contract subject to finance. Pre approval doesn't guarantee finance and you don't really need to do it.

Such a no brainer but I guarantee I never would have done this.

- if you are with Stirling Council then it will sit in the DA queue for 60 days then it will be assigned to someone. By the time it's approved it maybe more than 90 days and I think most preapprovals only last that long? I could be wrong.

Will look into the 90 days. cheers.

- I assume you have a quote from the Builder at the moment? Not much will change from this for the HIA contract - it just has terms around that quote. This together with a specification addendum will be the basis for what you receive. Ensure that your HIA contract specifies the addenda that forms part of the contract.

Verbal quote at the moment, I was going to go and meet with the builder before Christmas once I got a pre-approval and get a contract written up. Didn't want to waste the builders time on the specific numbers if the bank wasn't going to give us the money that would land in the ball park verbal figure??

I'm going to google it after I send this, but what is an "addendum" ?? specifying addenda??

- do check the part of the HIA contract that states how many days the builder has to go to site - you don't want it ridiculously long.

Will do.

- do check the number of days the Builder has to complete works

Copy that.

- do feel free to add things to the HIA contract but of course the Builder needs to agree with that. You can add things like "an independant building inspector will be inspecting this site at stages x and Y. The defects found in the report will be fixed within xxx days or at an agreed time between Cruskits and Builder"

Will look into this.

As to depreciation this can be done from the addendum/specifications and working drawings and the Accountant or QS can do this. Working drawings won't be done until you have DA and they take around 4 weeks to produce post DA.

I thought the plans that we submitted to council were the "Working drawings"
I didn't realise they were different. Cheers for the heads up.

Westminster I hope your enjoying NYC. Could you message us your business details either here or PM. I think I'll need to utilise your skills in middle January if your back in town?? Run a few things past you

Cheers again

 

[westminster]

Westminster,

Thank you for taking the time to reply.

When you are young, eager and inexperienced it is so easy to overlook some things that are integral to a smooth(er) development. A lot of the points you have mentioned I hadn't even thought of. Obviously people go through this process, make mistakes, learn from them and go again. However the chance we have to get an insight and learn from others experiences, with access to invaluable resources (SS users) through an amazing website (Somersoft) is priceless.




Such a no brainer but I guarantee I never would have done this.



Will look into the 90 days. cheers.



Verbal quote at the moment, I was going to go and meet with the builder before Christmas once I got a pre-approval and get a contract written up. Didn't want to waste the builders time on the specific numbers if the bank wasn't going to give us the money that would land in the ball park verbal figure??

I'm going to google it after I send this, but what is an "addendum" ?? specifying addenda??



Will do.



Copy that.



Will look into this.



I thought the plans that we submitted to council were the "Working drawings"
I didn't realise they were different. Cheers for the heads up.

Westminster I hope your enjoying NYC. Could you message us your business details either here or PM. I think I'll need to utilise your skills in middle January if your back in town?? Run a few things past you

Cheers again

Yes addendum or specifications are pretty much the same thing. Some builders have a specifications list then the addendum is your choices made for everything - ie tile 1234 with purple grout

Alas there is plenty more stages and hoops for you to go through. Some Builders will go do a quote off DA plans some will wait for the full working drawings. The estimating team in the builders will do up a quote based on the designs and the level of finish you want. This is usually what is referred to in the HIA contract.

They often like to do Estimating after DA because during the DA process the Council may ask for changes to the design which will impact on costings.

Once DA is approved the very detailed drawings (working drawings) will be drawn these are the ones which show how the roof structure is laid out, the internal layouts of the kitchen cupboards, electrical plans, lighting plans. Then engineering will determine footings etc.

Once that is all done, it goes back to Council for a building permit to be issued then you can build.

 

[benofbrisbane]

Specify as much as possible and them some.
Ensure draws reflect value added.
Ensure that in order to get final payment building must have certificate if classification.
In qld the qbcc contract is the best for the customer.
Building industry contracts like master builders/hia generally in favour of builder.
Don't let the builder have a charge on your land.
Get someone experienced to check the specs.

 

[bumblegoodie]

I have never seen a development contract.

Is the development contract the same as the builder specification?

Does it provide high level requirements for example, type of windows, doors, light fittings, tiles, brick type, etc?

any chance someone can send me a copy? sorry for asking a dumb question ? still a noob!!!!

thanks