The SPASA office has been asked several times in recent months about what to do when a consumer has signed a contract and then discovers they can't obtain finance.
Some members have advised that they've been contacted by clients who have obtained finance a year or more after signing the contract. In this situation, the client is entitled to insist that the builder honour the building contract even though the contract price no longer reflects the true cost of the construction. These un-commenced contracts suddenly become very active, and the builder may find themselves obliged to complete an unprofitable project.
To manage this risk, and to ensure that the status of all domestic building contracts is clear, it’s recommended that builders contemplate terminating a domestic building contract if the client fails within a reasonable time to provide evidence of finance. A new domestic building contract with an up-to-date contract price can always be signed later if the client is able to obtain finance.
If work has not started by the commencement date (as defined), the builder can put in an extension of time claim and additional costs, plus margin – as clause 11 of the SPASA contract caters for 'Delays'.
Yes, this will mean more paperwork, but at the end of the day, it should cover the increased costs. In the 2016 form of the SPASA contract, clause 17A allows for termination for any reason before works commence on site. This is an alternative to claiming for delays with additional costs.
But before you do anything: SPASA strongly recommends builders call specialist construction lawyer, Jeremy Johnson on 0418 132 917 for ONE HOUR OF FREE LEGAL ADVICE. Jeremy is a recognised building industry expert with over 25 years in construction law and is very familiar with the challenges confronting those in the pool and spa industry in today’s marketplace.
Call Jeremy on 0418 132 917 to take advantage of this Exclusive SPASA Member Offer.
