Tips for resolving disputes after building a new home or buying off the plan (Part 2/2)

26-March-2019 Commercial Disputes By admin

Part 2 of 2 of the Expert Guide on Dispute Avoidance and Dispute Resolution in Building New Homes or Off the Plan purchases.

See part 1, Tips for when building a new home or buying off the plan here: https://www.streeterlaw.com.au/tips-for-when-building-a-new-home-or-buying-off-the-plan-part-1/

Evatt Styles, Accredited Specialist – Dispute Resolution provides homeowners with an overview of the typical scenarios and types of potential disputes which want to avoid.

This is not what I purchased?!

Jan bought an apartment off the plan. Prior to signing the contract and paying the deposit, Jim the Agent showed Jan a display with stunning stainless-steel fixtures and marble, it will have a view of the ocean and it will be 124m2 of living space. “This is what your apartment will look like Jan”. Jim handed Jan a brochure (which Jan thought looked even better than the display) and said “We’ll email you the contract to sign and send you a great deal- it’s the last ”. Jan paid her deposit and executed the contract.

Jan attended an inspection of the apartment, 8 weeks prior to settlement. There had already been delays in construction. Jan was gobsmacked – the apartment did not have a river view; the fixtures were not stainless steel, the finishes were poor and there was damage to walls, to the fittings and the apartment did not have 124m2 of liveable space, it was 15% smaller. The valuation obtained by the bank was also considerably less than expected.

What can Jan do?

Subject to the terms of the contract, plans and the representations to Jan, some of the options include, but are not limited to: –

  1. Rescission of contract – Jan may be entitled to rescind the contract and be restored to the original position had she not entered into the contract [with a few exceptions];
  2. Negotiation – Jan may be able to negotiate with the property developer to rectify defects or in respect of the lot. The alternative lot is not what she wanted, however she can live with it.
  3. Termination of contract – Jan may be able to terminate the contract and seek to recover the deposit and damages from the vendor.

The Builder hasn’t finished the work?

John signed a building contract to build his “Forever Family Home” – a five-bedroom house with all the bells and whistles. 12 months after the commencement date, John was shocked to discover when attending the building site that the building is 4 months delayed, the bathroom has been installed in the living room by what has been discovered to be an unlicensed subcontractor [this does happen] and the builder is asking for the next instalment to continue the building work.

What could John do?

Subject to the terms of the contract, plans and the representations to Jan, some of the options include, but are not limited to: –

  1. Consider an application to NCAT under the Home Building Act 1989 (NSW) (HBA) – If a builder wrongfully refuses to complete building work governed by the HBA, the Tribunal has jurisdiction to direct the builder to complete that work. This is known as specific performance.
  2. Negotiate – negotiate with the Builder to create what is called a Scott Schedule for Rectification, which is a list of the defects, what is agreed to be fixed, how and by when. This requires planning, preparation and monitoring.
  3. Terminate contract – and consider proceedings for recovery of rectification costs.
  4. Consider the available Insurance Policies and applicable Home building compensation scheme.

Dispute Resolution

There is always a risk in litigation that you may be either unsuccessful or face adverse costs orders, depending on the jurisdiction. Each has its place depending on your circumstances.

The governmental bodies, Courts and Tribunals that you should be familiar with in Building and Construction Disputes are: –

  1. State and Federal Courts which have specific lists for example, Construction matters;
  2. Office of Fair Trading; and
  3. NCAT- Home Building Division.

What can you do?

Discuss your rights, obligations and the dispute resolution options available with our Accredited Specialists – Mr Mark Streeter or Mr Evatt Styles by contacting us via the webform below or calling us on 8197 0105.

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