Help/suggestions for Dealing with Builder

I am looking for suggestions/ experience with developers who have dealt with builders being a nightmare.. unfortunate but true issues.

We are halfway in construction for which the base was done in Oct2019. But the builder started dragging his feet. It appeared that he had some financial issues for which he didn't get anything done till Feb 2020. Then after a lot of noise, he started the frame and got it done till 8th April 2020. Now he has halted again. We sent our lawyer notice and then he started on bricks for lockup and again halted. We haven't been able to get to lockup till now. This is purely mis-management from the builder around his funding to procure goods in advance to keep the project going.

Contract runs out at the end of August, but we prefer the builder finish the work as going through the bank to redo the loan will be painful even if we somehow find a way to sack the builder. Just wanting some guidance around what are the options we have based on experience of a developer (as lawyers will make it hard).

I can start to fine him based on $$ on the contract once it runs out in August end (and we have decent figure to cover our damages), but a guy who is struggling with financial issues as is, I don't have hope he will do anything. He will just make it difficult for us towards the end. At the moment after showing lot of patience and trying to get resolved peacefully hasn’t worked Yet.

This builder is a small scale builder. I am trying to find out what does it mean to be a builder.. what are builders scared of ? From other builders/developers on the forum What are the main fears that builder will have ? what action can I threaten where can it hurt him the most, not that I want to act, but atleast show that we r prepared ?

 

Just keep pushing him as much as you can, consistent follow ups by email in a formal tone so that you have evidence. Lodge a complaint with Fair trading as this is one of the few levers you have.

If he has financial Issues there is a limit on how much you can do and him going into liquidation may atleast allow you to get the home building insurance to complete the work although that will also be painful

Although you need to keep pushing him try and maintain a reasonable relationship if possible - offer some carrots as well eg. If he gets the place into lockdown by xxx date you will not claim on liquidated damages for a month. Btw - the contract will have many ways for the builder to extend the contract period - rain is an easy one but there are many others such as availability of supplies etc

 

If he's broke/struggling you'd be putting in good money and not getting anything for it. Terminate the contract or you'll be in for years of grief.

 

If you are at lockup, I would try to terminate the contract at this point, come to a fair agreement and then find another builder to finish up for you.

 

OP - make sure you follow the correct process for Victoria - if that’s where the build is.

Contact consumer.vic for a referral/advice. Building disputes, defects and delays

 

Read your contract, there should be a set off clause in there, also consult a lawyer regarding my suggestion. I'm not sure how much of this you are financing versus using your own cash. But what we do (as a builder) with financially struggling subcontractors (tradies) is procure the materials for them, get them to indemnify us by signing a waiver and accepting this amount to be set off on their subcontract. We then we get the subcontractor to install only as most of the time, their issue is not skill and labour it is cash flow and procurement. For example; if there is a subcontract worth $20,000 and it is for roofing. The roof sheets cost us $7,000 and the rest is labour. Before I have paid him anything, I will get him to sign a set off clause waiver that allows me to deduct his contract value by $7k. I will then purchase the roof sheets for $7k on their behalf get it delivered to site. He will then install the roof sheets and will be paid the $13k only.

A financial penalty such as ' liquidated damages' will have little effect on a company that doesn't have any money to begin with and likewise the above gives them an incentive to see it through.

 

how often do people do this?
Have been reading a lot of builders going broke/not finishing jobs scenarios recently

 

Not often and it is very cumbersome and administratively expensive but it skull drags your project along as opposed to bringing it to a complete halt for an indefinite amount of time - so this is an option / alternative if you don't want to go straight down the path of terminating contracts. Likewise you should consult a lawyer because it comes down to the structure of your contract to begin with. The structure of my subcontracts allow for this, others contracts may not.

 

Is their a shonky builders website for victorian builders . Obviously the law is a toothless tiger and VCAT hearings are time consuming and costly to the poor buyer . I thought the victorian government was doing a full review together with the VBA on how to deal with dodgy builders after the cladding crisis . Does anyone have any info?

 

I started the thread so only fair I give my 2 cents. My project still not completed and is 6 months over contracted period...Victoria premier and COvid hasn’t hasn’t helped Melbourne market and developers as well. Everyone gets their cut except Developers ! Where m I till now.. I was hoping I get the keys in 3-4 weeks finally, but again lockdown in Victoria !!

lesson learnt .. building contracts, builders, VBA, lawyers and everything around is part of solution but not the solution. I had a hefty $$ for delays and I stared giving notices etc, but that is a belt not a Carrot to get the work done, and as developer we need keep eye on the game.

Best tool is Negotiation! Get the damn thing done. It’s rudimentary but that’s the way. You need to know what kind of person he is and his frequency and match urs. Don’t stop belting with hefty $$ as per contract but show the Carrot that u will consider.

 

Thanks.DEV .looks like you learnt from and costly experience . I have some plans and permits (no working drawings) and seeking builders in the SE . Issue is trying to identify a good custom builder .I get a quote but then have to seek out references and they provide only the good ones ,not the ones they had problems or stuff ups. I prefer a larger builder ,at least their risk to reputation is high and you might get less delays and stuff ups,that is my thought anyway. Like to know how you went about seeking a builder? hope everything works out for you

 

Risk vs Reward.. Higher the risk i.e. smaller builders $$$ can be saved if you know how to manage the risk and mind you there are bouncers with COVID and unknowns.

Bigger the builder more the $$$ as you pay for their display rooms/staff etc. There is no gurantee that things will be smoother, but thats the expectation you can hope.

My decision factor these days comes down to my or JV partner who is putting their money in market. If you are JV'ing with risk averse guys, then go medium scale builder who run 50 plus projects a year. If you want to get hand dirty go smaller. If you had burnt hand few times, you will know what are the things ur looking for. Other thing I am doing is mixing them up i.e. if I have two projects, less headache in one vs get hand dirty with other. Just dont shake all projects in same bottle/builder. But thats me, no recommendations

Regardless who, dont feel shy to put hefty $$ penalty with carrots hanging at the end. With reference calls, ask for bad experiences than the good one and people dont feel shy to tell that too and if its ur $ then u r the boss to make the call !

 

Thanks DEV .I am a first time and planning a battle ax . Do you know of any builders in the SE? preferably a middle of the road builder

 

I'm glad you've been making some headway even if it's not at all what it should have been.
Kudos to you for your patience and mindset to work out how to best motivate in this hard situation