Hi,
Obviously a business/company can fail mid way though jobs. I have some questions, regarding the legal aspects for Property Development, using the below example.
Example: A Developer pays an Architect/Draftsman a deposit to draw up floor plans & to submit them to council in the hope of planning approval.
What could the Developer do if the Architect/Draftsman were to close shop (business/company failure) during the creation of these plans?I am guessing that a debt collector could be engaged however that approach seems a little light on and the chances of getting the deposit money back would be slim.
Are there other mechanisms in place that can assist or it is a matter of the Developer speaking to a lawyer and start legal proceedings?
(If it was worth while).I hope that you can provide some details.
Thanks.You should do 2 things:
1) pay at the end,
2) get a personal guarantee from the architect.If the architect company does down you will be an unsecured creditor. Same if the architect is an indvidual. No use in engaging a debt collector generally. If you received money back it would be a preference payment and subject to clawback by the liquidator or trustee in bankruptcy.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Great advice, thanks again Terry.
Just like to know, are there any insurances (that I could buy) to cover unfortunate events such as this?
Cheers.
I don’t think any insurance covers this sort of thing, but I could be wrong.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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