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VIC Builder Pulls Out of Building Contract - What to Do?

Discussion in 'Property Law Forum' started by Danielle Jenner, 24 March 2015.

  1. Danielle Jenner

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    We had had finally received our contract after weeks of waiting. We had the contract and were about to go to bank and get our home loan finalised. Then we receive and email from out builder stating that we would be pulling out of the contract saying that we want to be " intimately involved”.

    The builder had advertised his company does custom home designs. Maybe this was false advertising. We had a few obstacles along the way but nothing major well we thought the issues are the following:
    1. We asked the builder to take out the tiles and bathroom items because they were cheap; he was not happy and instructed us that he only uses his “preferred” suppliers.

    After some negation he came to the party after we formally wrote him a letter reminding him that we do not have any legal responsibility to his “preferred" suppliers and that its our house.

    2. At draft 2, we identified everything we wanted and made changes so that the next draft would be perfect and signed off. However, that was not the case most changes were missed and they did another 2 drafts.

    3. We received a phone call from 5 days after the contract was due from the builder stating the following 2 things.
    1) apparently our BAL had some what come in at 29.5 by “someone” he would not name. I did refer him to our Intrax report section 3 page 16 which clearly states a BAL rating in 12.5
    2) Then suddenly our energy rating did not meet the 6 star required for new homes being built in Victoria. I was somewhat confused as it had never been an issue during the whole design process. Surprise Surprise again he would not tell me who it was and what their position was.

    4. We received the contract and I noticed some key items missing from both contract and final designs. When I rang him I asked him if he was going to fix the missing items. Than I asked about bringing the independent home building inspector initially he was ok then I asked him if it would be possible to get 5 days notice so that we could organise time off and the inspector to come. Next day he emailed us and said he was pulling out.

    After all of these issues, we were willing to let things slide then we received the email stating he was pulling out. We did not receive a letter of intent, nor was he willing to talk to us like adults. He just said he did not want to talk about it.

    We received an email from him today with a letter from his lawyers wanting us to accept the copy right of the design of the home and not go after him for our deposit back. Also as a sign of goodwill he will drop the amount owed for extra "drafting fees” that the draftsman wracked up, not us, to a sum of $1012.42.

    What to do under property law or contract law?
     
  2. Tracy B

    Tracy B Well-Known Member

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    Hi Danielle,

    Can I confirm that:
    • No letter of intent or written agreement was made between you and the builder?
    • Was an oral agreement made at any time or were terms of the contract still being negotiated?
    • Did you sign any document (particularly, in relation to the deposit)?
    • What "drafting fees" are they? Were they for drafting the house plans? Did the builder breakdown the fees and inform you of "drafting fees" at the beginning before he went ahead and drafted?
    Building disputes between homeowners and builders are surprisingly common. There is a free resolution service offered by Consumer Affairs Victoria. If CAV cannot help, here are a further list of authorities that offer information, receive complaints and assist in dispute resolution: see "Victorian Government - building and construction industry". If these bodies cannot help, or if you are seeking compensation, you may need to contact VCAT to resolve your dispute.

    Your matter is quite fact specific and would depend on what contracts were entered into, what letters/written documents were sent and the contents of such. To get a better understanding of your legal position, you should contact your local community legal centre (Fitzroy Legal Centre also offers drop in sessions and they are not limited to the Fitzroy area, so may be a good place to start).
     
  3. Danielle Jenner

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    Thank you so much to getting back to me


    We did sign an authority to proceed, which indicated that if we pull out we would be liable for $250 the administration fee plus cost incurred. We did however get 3 draft changes in the “standard inclusions”.
    • No letter of intent or written agreement was made between you and the builder?
    Only an authority to proceed
    • Was an oral agreement made at any time or were terms of the contract still being negotiated?
    Yes there were time frames but the builder could never stick to time frames for example Both my partner had to take a day off see him for the contracts but he decided to not have to contracts done because he wanted to talk about trust and wanted a grantee that we would not pull on him. Thus costing us 2 days of wages.

    • What "drafting fees" are they? Were they for drafting the house plans? Did the builder breakdown the fees and inform you of "drafting fees" at the beginning before he went ahead and drafted?
    We had asked several times for the fees but he said they were included.
     
  4. Tracy B

    Tracy B Well-Known Member

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    Hi Danielle,

    From what you have written, it appears you have a good case against the builder for breach of contract (oral and written) for the following promises:
    • Contracted work would be completed by X date
    • Costs would be inclusive of drafting costs
    There may be other promises between you and the builder that were breached not mentioned above. Either way, you can lodge a complaint against the builder with CAV and the Building Authority (links above). If this does not resolve the matter, you can initiate action with VCAT for compensation due to breach of contract (or misrepresentation or estoppel). You should consult a lawyer before litigation to ensure it is worth the time and costs involved (and that you have a good case).
     

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