We are about to start a small development in SA. Building 3 x 3br courtyard homes on a block and are in the process of finding the best builder for the job. The builders we have interviewed so far do not have penalty provisions in their contracts, so we are not safegaurded against delays, (have made this mistake before). Does anyone know the exact legal wording to use so that we can include a penalty provison in the contract?
thanks
Xenia
We buy properties in all conditions. Quick settlements, no agents required
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phone 0412 437 582What contracts do your builders want to use?
Pretty much every contract I’ve seen has had a liquidated damages clause in it…
You may also want to consider adding a bonus for the builder if they complete the work in advance. Seems to work better than penalties if they finish in arrears [biggrin]
The 2 common types of contracts used are the HIA and MBA contracts.
If the builder is not a member of one of these inductry bodies find another one.
If they suggest a different contract reject them. These contracts are written in plain English and while they look after the builder will protect your interest and both include penalty clauses for late completion
Michael Yardney
METROPOLE PROPERTIES
Author of Australia’s leading property e-magazine.
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FREE subscription http://www.metropole.com.auThe state governing agencies also have “plain english” contracts which are OK to use (and also have liq. damages clauses).
However I agree with Michael. Go with a builder who’s a member with HIA or MBA, and they will almost definitely use their chosen agency’s contract.
Steer well clear of any other contracts IMHO.
The MBA contract is the better one to go for. However the builder can legally ask for extensions for things such as wet days, delays due to unavalibility of materials, etc
You may want to put in market rent as a clause if the builder goes over time then he pays market rent
Personally, I dont understand how it is in the best interest of the builder to take his time any way because the longer he takes to finish a job the slower he gets paid.
But it seems that some builders get too greedy and take on more than they can handle.
So one of the questions you may want to as is how many jobs he has on the go and compare this to how many carpenters he has or how many gangs he has working for him.
If you suspect he has too much on then expect delays.
Regards,
Sailesh Channan
http://www.developersedge.com.au
“Helping you select, develop and profit from property”
1300 73 5934
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