Builder Increased The Price and Demanding More Money

rahoolz on 13/10/2022 - 21:01
Last edited 13/10/2022 - 21:06

One of my friend build a house in NSW. Contract was fixed and was signed last year. The construction started early last year in (2021). The invoices were raised and the payments have gone through the bank as well. The construction was delayed due to COVID and rain was suppose to finish end of last year. Now at the finishing stage builder put up the price by 35% advising he is passing the cost. Under stress my friend Agreed to pay as he didn’t wanted to work to stop. All the bank payments has been paid, and he paid for variances. finally after so much of delay house was handed over and friend moved in. House has several defects that need to be fixed. builder is demanding for more money and sending more invoices than what was agreed to during the increase

My question is, is this possible? I understand that there is price increase off late but for us the building materials were all ordered last year the invoices raised and paid. My friend have paid everything almost 20% more than contracted price. There were few variance which he agreed to

The contract favours the builders a lot and if he go and handle this legally it is going to be a long process.

Can you please pour in your insights on this. Thanks

Home & Garden

Comments

  • tonsta on 13/10/2022 - 21:09
    +16

    Get legal advise, take the contract and examine the details with a lawyer.

    No on can give you advise until we see the details.

    • altomic on 13/10/2022 - 21:10
      +25

      *advice

  • altomic on 13/10/2022 - 21:09

    would need to see the contract first

  • CyberMurning on 13/10/2022 - 21:20
    +1

    Why government allowed builder to raise the cost if the materials are up for example… Should it be their risk doing businesses?

    • pharkurnell on 13/10/2022 - 22:34

      Good way for builders to over quote by shit loads incase prices go up and good way for builders to go broke… like dozens of BIG companies are…

  • Ughhh on 13/10/2022 - 21:22
    +14

    House has several defects that need to be fixed

    Shouldn't this be covered under warranty?

  • jizmo on 13/10/2022 - 21:31
    -1

    Progress payments by bank complete.
    Why doesn't your friend post here so we get what's really going on.
    Rather than a pissed off mate with second hand information.

    • Alexander420 on 13/10/2022 - 21:45
      +7

      Because it was not a friend but himself

    • pegaxs on 13/10/2022 - 22:15
      -1

      Sorry, what OP meant to say was their “friend”

    • [Deactivated] on 14/10/2022 - 10:52

      Why doesn't your friend post here

      I suspect OP knows how unforgiving and judgemental the OzBargain forums are. I think OP is "taking one for the team" by being a proxy for crowdsourced input into their dilemma.

      so we get what's really going on

      And there it is. The OzBargain cynical lynchmob mentality. $9.99 Bunnings pitchforks at the ready, people!

  • djkelly69 on 13/10/2022 - 21:34
    +4

    If the house is finished and your friend has moved in, the contract is considered finished as well. Meaning the builder can't just ask for more money. Sounds like the builder is trying it on big time because it worked the first time.

    Defects may have been covered in the contract, but there are also legislative requirements that cover these as well.

  • jv on 13/10/2022 - 22:28
    +1

    Can you please pour in your insights on this.

    What does your lawyer say?

    • boomramada on 14/10/2022 - 07:37
      -1

      Pay up or builder go bankruptcy and you be end up with half done build?

      • spal on 14/10/2022 - 08:46
        +1

        Looks like house is built. Additional payments of 35% were made. Now to rectify the defects the builder is asking for more money.

      • rahoolz on 14/10/2022 - 12:01

        House is already been . Friend have moved in

  • MeesusEff on 13/10/2022 - 22:49
    +4

    I'm on a Shonky Builder's Facebook page and there are so many stories of people seeing with $40-80k increases, some even before the work has progressed much but it they cancel they also lose $20k+ in costs. Enough horror stories to make me never want to build or own house.

    • [Deactivated] on 13/10/2022 - 23:59
      +8

      i'd never use a builder, unless they were family. modern houses are built so poorly, you are far better off getting an old house and doing a little bit of renovating, it's easy to oversee and inspect work when it's only the bathroom or kitchen being remodeled (hopefully not into the tasteless modern blend of white, coupled with white and finished with white)

      especially in Tasmania, AFAIK we don't have mandatory builders insurance, recently a company here went bust and a few people were out of pocket the price of their house, not sure what happened since, but i doubt they have been recompensed

      • [Deactivated] on 14/10/2022 - 08:37
        +2

        i'd never use a builder, unless they were family.

        Because nothing ever goes wrong when you do business with family.

        • [Deactivated] on 14/10/2022 - 08:47

          fair point, though i trust my family, to a certain extent. harder to (profanity) over family and get away without any consequences, unlike most builders.

        • Mr Haj on 14/10/2022 - 09:38

          I mean we're only talking about a half a million dollar contract.

      • The Delray Misfits on 14/10/2022 - 09:34
        +2

        yes, house build quality these days is shocking, looks like its made of cardboard

        im so happy i bought a mid 80s house that looks solid as rocks and only had minor work needed to be done in that time

        • 1st-Amendment on 28/10/2022 - 14:04

          looks like its made of cardboard… im so happy i bought a mid 80s house

          Building quality started going down after the war with the rise of cheaper materials (pine, chipboard, vinyl, fibro etc). Before that everything was double/triple brick and/or hardwood which is why a lot of those houses are still going strong 80+ years later.

    • Hybroid on 14/10/2022 - 00:05
      +1

      This is why turn-key packages exist. You agree the scope, details and a fixed price with builder upfront.

      They deliver as per contracted scope and fee. No surprises.

      The downside is naturally fewer customisable options and inability to change your mind on a specific finish or wall half-way through. Which might suit many anyway.

  • orangetrain on 13/10/2022 - 23:17
    +2

    Ask the lawyer that looked over the building contract. Hope you didn't risk 6 figures worth of money by putting trust in the builder and their lawyer to not create an one-sided contract.

  • EightImmortals on 14/10/2022 - 07:01
    +5

    See your solicitor quickly!

    And don't hand over any more money in the meantime. Could be just a dodgy builder or could be a dodgy builder about to declare bankruptcy so you wont get your contract fulfilled and you will lose any money you give them above what you were contracted for. (IANAS)

  • d500 on 14/10/2022 - 07:23

    The majority of house construction contracts are through fixed price MBA (Master Builders association) or HIA (housing industry association). Both types of standard fixed price contracts favour the builder greatly.

    However, assuming the contact was a fixed price type the builder is unable to ask the owner to pay for additional costs incurred. However, over the past couple of years it is not uncommon for builders to ask owners to pay extra, and many have done so in order to not lose their builder.

    First check if the contract included special conditions that allow the builder to alter the price for escalation. If so, the contract is no longer fixed price. This may be interpreted as misleading conduct by the builder and so is easily argued that contract is invalid. Consider taking builder to ACCC for misleading the owner on this contract

    If no special conditions then the price increases are not valid, and owner has no obligation to pay them. They are obliged to pay valid variations. They should not have paid (although builder may have stopped works).

    Particularly if the house is now completed and builder no longer involved they should have no reason to pay additional costs. Talk to a lawyer

  • ForkSnorter on 14/10/2022 - 07:29

    I’ve never heard of a build that didn’t go over budget or over the initial quote. Everyone I know has complained about this.

    • EightImmortals on 14/10/2022 - 08:39

      By 35%?

      • ForkSnorter on 14/10/2022 - 08:50
        +1

        In the past no, but nowadays seems more likely.

        But easily $100k over initial budget in the past was very common from what I've heard.

        • rahoolz on 14/10/2022 - 12:01

          This one is nearly $180K

    • Typical16-bitEnjoyer on 14/10/2022 - 09:58
      -1

      Well duh, no one isn't going to complain if a price goes up (Just look at every expired deal on here!)

      If someone is complaining they didn't know the prices could go up, then that's on them. Practically every residential contract will have a clause in some form.

  • [Deactivated] on 14/10/2022 - 08:34
    +1

    Suggest to your friend:

    1. Get the building contact.

    2. Take contact and get professional advice from a solicitor/lawyer who specialises in property law. It would be helpful if they include ADR strategies as some sort of mediated/arbitrated outcome may be much faster than the legal system.

    3. Hang on tight. The minefield of builder's warranty x builder's insurance x certifier's liability insurance is an absolute sh1tshow in most Australian states and territories.

  • verio on 14/10/2022 - 09:17

    Sine the house is now completed, your friend now at least has some leverage.

    First talk to a lawyer, then make decisions based on that.

    It is very common for builders to do price raises even on fixed contracts these days. But this usually happens before the handover (during the construction). This is because they have the upper hand, what you are going to do, sue them? They can get bust and then construction will get delayed by years.

    However, with the house completed things are slightly different.

  • The Delray Misfits on 14/10/2022 - 09:28
    +1

    shock horror, builders behaving badly

  • JimB on 14/10/2022 - 09:56

    Why would you even consider paying extra after handover?

    Ask the builder to fix defects in a timely manner, otherwise you need to go to VCAT to force the builder the fix or pay for the costs to fix it by a third party.

    Builder is just bluffing.

  • Typical16-bitEnjoyer on 14/10/2022 - 09:56

    It's only probably the most expensive and important purchase your friend will ever make.

    Should they:

    A) Ask advice on Australia's favourite bargain website
    B) Speak to a lawyer
    C) Bikies

  • core101 on 14/10/2022 - 10:16

    For starters check contract for three signatures, both parties plus a witness.

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