What can you do if your builder goes into voluntary administration?

The government recommends “contact[ing] the administrators for further advice on whether they are likely to wind the business up or allow it to continue to trade”.

It went on to note that the builder or administrators may ask customers to agree to a contract price increase, and possibly other changes to contract terms, for their build to be completed, which is permissible and “may be requested as part of an offer for a deed of company arrangement”.

While allowed, the government has told customers that they are not obliged to accept revised offers, or vote for a deed of company arrangement.

In essence, what that means is property owners and customers who are in this situation should seek out financial and legal advice before they do make a decision either way.

To support impacted customers, the Victorian government provided some insight into how they can go about negotiating with their builder, and published the following advice:

“Assuming your builder is continuing to operate and working on your project, you can negotiate in good faith to reach a reasonable agreement about delays and cost increases.”

While the government does flag that a builder cannot make changes to a contract without a customer’s sign off or consent, the government offered the reminder “that the circumstances delaying your project and increasing the cost are likely to be beyond the builder’s control”.

They urge customers to take this fact into consideration when discussing how the project will proceed.

For customers who may be in doubt “about any aspect” of their building contract, the advice is to seek out independent legal advice.

Most recently, the Victorian government noted The Harmac Group as having gone into voluntary administration.

The insights from the state government follow concerns from HIA that the detached home construction sector is set for “a dismal year ahead”.

It follows the struggle of a number of construction companies to stay solvent, following several years of inflated prices for construction materials coinciding with labour shortages and delays caused by COVID-19.

Earlier this year, one of Australia’s biggest building companies revealed it was in financial trouble – The Porter Davis Homes Group (PDH Group) went into liquidation, leaving more than 2,500 house contracts in the lurch.

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