Builder with cash flow problems

[Jellybean]

Wondering if I'm being over anxious regarding our builder. Our build is about 4-5 months past its 'dead-line'. The builder has been dragging his feet and pulled out every excuse to explain his numerous delays. Usually it comes down to him not having paid for an item/service or just having not paid the tradesman. There are a few tradesman that have decided they will not work with him anymore. But now his staff of over 10 years are leaving and his own builders say they have not been paid and will not be showing up Monday for work . I know he has a cash flow problem.
The RMBA association has NOT been any help and have not responded to my wanting to complain about this builder. If the roof goes up we will be liable for the next stage payment. What do we do? on the one hand we want progress but Im not sure he will last the race - do I just hand over the money and hope for the best?
Is there a laywers Trust account that we can keep it in to ensure it gets used on our build or returned to us rather than pay this guy who may be going under? Is there any solution for this sinking ship?

[PTWhatAGreatForum]

What do we do? on the one hand we want progress but Im not sure he will last the race - do I just hand over the money and hope for the best?

Repeat after me - "good money after bad".

This is especially true if you are not out of pocket at this stage.

If it were me I'd have told him to **** off and where to stick his contract.

The RMBA association has NOT been any help and have not responded to my wanting to complain about this builder.

Remember this word - Racket

Is there a laywers Trust account that we can keep it in to ensure it gets used on our build or returned to us rather than pay this guy who may be going under? Is there any solution for this sinking ship?

Do you want to keep your shirt or not? Who's interests are you looking after?

Usually it comes down to him not having paid for an item/service or just having not paid the tradesman. There are a few tradesman that have decided they will not work with him anymore. But now his staff of over 10 years are leaving and his own builders say they have not been paid and will not be showing up Monday for work .

While everyone else is looking out for #1 you are asking us whether you should self nominate to be the last cab off the rank?

[McDuck]

What does the contract say.
Are there any mentions of time or timely fashion.
If you want to break or modify a contract, it becomes a legal thing.
Legal advice is best.

[Rosco]

Hi Jellybean,

House building companies get money in advance from their customers, so their cashflow should be awesome! When helping with monthly accounts for builders, we adjust their sales for income in advance, and the last two I have looked at would have over $500k that they have received in advance of doing the work. So their bank accounts look great!

If your house builder doesn't have cash, there is something wrong!! I would get legal advise and be very careful about paying further amounts in advance

Ross

[PTWhatAGreatForum]

What does the contract say.
Are there any mentions of time or timely fashion.
If you want to break or modify a contract, it becomes a legal thing.
Legal advice is best.

I agree legal advice is a good idea

But it's not like the builder guy has any money to enforce the contract anyway - which given he has likely significantly breached it - may be unenforceable.

I suggest the OP grow some balls and give the ****head the same level of "give a toss" as (s)he has received.

My Mother has previously practiced as a lawyer and she has experience in insolvency and just this sort of matter. What I have learned from her and through my own experience - and let's be very clear - this guy is clearly a dud, everyone around him knows that and is bailing out and yet the OP wants to hand over more money?

There is only one thing they need to know and that's if the money remains in their own pocket that is a very good position. If the money is not that is a very weak position and they sure don't want their money to become an asset of a business which is sinking...

IANAL (I am not a lawyer) but guaranteed the advice I have given for free is the same as what they will hear should they choose to pay for advice.

Is there a laywers Trust account that we can keep it in to ensure it gets used on our build or returned to us rather than pay this guy who may be going under? Is there any solution for this sinking ship?

Let's think about this for a moment - why do you think he has any suppliers who will supply him and anyone who will work for him without receiving money (which is in a lawyers trust account)...?

[Jellybean]

Thank you all of you. Realise I have been in denial and hoping (unrealistically) that this problem with resolve with time. Ok! so can anyone suggest good construction/property lawyers in North Shore, Auckland? I don't think my regular conveyancing firm does much of this sort of thing and they have not replied to my emails regarding this matter.

[Connor]

Might be worth talking to Ivan from this board. He might be in the city though. I'm on the Northshore as well.


Would you mind pm me the name of the company? I'm getting ready to build a house too and wouldn't want to be caught with a builder going under.

[Jellybean]

Hello Connor - I've sent a PM. All the best for your build. A long time ago I thought is was an exciting journey - now I just want to see the end of the tunnel!

[Wayne]

Re the money - have you paid more than the work done?
ie if you paid the next progress payment for the roof and the builder went bust, say you have paid $100k, would you have $100k of building so you could get someone else to finish the job with the money left?

Aside from the 1st deposit you shouldn't be paying more for each progress payment than the progress achieved.

[Nick G]

I'd line up another builder before you ended your agreement with your current one.

[jimO]

I'd line up another builder before you ended your agreement with your current one.

doubt you will get a bldr so close to xmas

[Nice]

Of the 3 or so quotes you received before selecting this builder and starting work, where was he on the scale of prices you received ?

"The pain of receiving poor quality due to paying too little lasts a lot longer than the pain of paying too much and receving good quality" or something like that !

[Jellybean]

Hello.
So we went to a property specialist lawyer is Albany and asked him to read our various contracts and give us ALL solutions possible. The lawyer suggests we send a "notice of default" which would apply pressure on the builder. After 10 working days we will then have the right to terminate our contract with this building company. The lawyer says he knows a builder keen to take on our build??? He has brought this up twice already and not come up with anything else- should I be suspicious?

In the mean time we have reach the stage where the roof is finally on (Hurray!!!) The building company has issued us with the next "stage payment". It's been 1 Year since they started building.

We have arranged for a valuer to assess the progress as per bank requirement. We are thinking it may be worth getting a quantity surveyor to give an accurate cost to the build.

The builder is promising that the build will be "wrapped" and tight (assume he means weather tight) before christmas -
However the window and joinery company have called us because they have not been paid. They say they have aluminium frames made up but the will not purchase glass until the rest of the money is paid and the builder is not responding. Given that xmas is nearly upon us, they don't see the glass being in until late Feb!!!
The RMBA says I have to pay the stage payment or the "platinum RMB contract" will be voided????
Where to now?

[Jellybean]

Of the 3 or so quotes you received before selecting this builder and starting work, where was he on the scale of prices you received ?

"The pain of receiving poor quality due to paying too little lasts a lot longer than the pain of paying too much and receving good quality" or something like that !

This building company (CH) was actually slightly dearer than David Reed and others, (was mid range of all the quotes). They had an excellent "no cowboy" rating and we went to some of the homes CH had completed and the houses appeared to be of a high standard. Their quote was very detailed so we thought they would be quite thorough. The owner/director always made time to chat to us several times regarding all our concerns. Seemed like such great communication and the company appeared large enough to be able to carry the debt of building a house in the $1-2M range since they had several projects in that range.
Furthermore, I had asked for a list of recent home builds they had completed and randomly called 3-4 past clients to get their feedback. There were some that advised we put everything we could into the addendum (which we tried to do),but there was no indication that CH had done poor work or was devious.
The builders on site, seem to imply that CH cash flow problems started about 2 years ago (about when he coincidentially got divorced and which was when we signed him up). Definitely did not choose cheapest - a poor choice nevertheless.

[Davo36]

Thanks for updating us Jellybean. This is never an easy situation when your builder mucks you around.

We closed in a carport area under our house about 7 years ago now. Made a rumpus room and workshop etc.

And the builder's marriage of 24 years went tits up half way through. So I know how it is.

That lawyer sounds OK, but you need to do all your checks again should you choose to use his builder. i.e. go and see the houses, ring the references etc. etc.

Re the glazing, can you pay the glazier directly? Then things don't get held up and the money won't disappear anywhere. Unless the glazier goes under... just kidding really.