I have a pending contract signing with Metricon for our house build.
The contact is a standard HIA contract, seeking feedback / thoughts from anyone familiar with the HIA contract or experiences with house builds as to whether there are any gotcha's or areas that should looked at more closely
Thanks in advance
Double and triple check everything.
Everything.
Anything they said you would get in the sales process needs to be in the contract or suddenly it never existed.
Thanks, we have a separate document that outlines what will be in the build that we have been watching very closely for accuracy and price.
More the HIA side of things want to be sure on, and willing to hear other people experience
areas that should looked at more closely
Look closely into variations, unforseen works, works out of scope, stuff related to all that.
The hia contract heavily favours the builder. Best you can do is make sure you understand your obligations and rights and do not accidentally invoke additional variation costs from the builder.
If you have the chance, consider putting forward a contract prepared by your state fair trading body. These are usually more balanced and protective of the consumer. Remember, the HIA is not a consumer body, it is an industry body which is there to look after builders.
We're building with Metricon in northern Sydney.
They will not make major changes to the main body of the HIA contract, specially the liquidated damages amount,however they will allow small amendments to the variations that you sign.
eg In the fine print there is a clause that they can substitute fittings-finishes etc. with equivalent without notice if they can't get supply, we got them to change it to
"must be equivalent quality and value and must be approved in writing or email by us first"
Our build has got to to the framing stage quickly with no hiccups.
We had gone with another project builder and pulled out due to their rubbery figures. I was impressed with Metricons back office organisation they are like McDonalds every process is
clearly defined and well organised.
Ultimately the contract price is very dependent on your sales person knowing the area so they should have realistic provisions for rock excavation, material handling, traffic control etc.
so you shouldn't get huge variations during the build. Our first 2 progress payment were as per the contract no variations.
We got a saleman who has been with them for 20 years and was on the pessimistic side for site works, at the end the price came down slightly from what was in the initial contract.
The hia contract heavily favours the builder.
...
If you have the chance, consider putting forward a contract prepared by your state fair trading body. These are usually more balanced and protective of the consumer. Remember, the HIA is not a consumer body, it is an industry body which is there to look after builders.
+1
Here's the main problem areas for both you and your builder-
http://www.build.com
With a large builder like Metricon I can bet you any amount of money they'd tell you to rack off if you asked them to use another form of contract. They are a big sausage factory and are all about following a set process and pumping out houses with minimal administrative fuss.
A HIA/MBA contract whilst is favoured towards the builder, is as fair as you'll get.
With a large builder like Metricon
Well I wouldn't put it like that but the basic premise is correct. I was a long term member of the HIA and you can rest assured their standard contract is the result of tailoring it to meet all Consumer Law jurisdictions, as well as long experience with disputes and Court decisions. In that regard it has excellent mechanisms and protections for both parties for any disputes that may arise and their resolution. There is no way in this day and age builders or consumers want to go it alone with the legal minefield of their own building contracts and I'd be very wary of one off building contracts proposed by your builder rather than HIA or MBA contracts.
Bottom line is, you don't feel comfortable engaging Metricon then walk down the road to engage one you do and London to a brick you'll be signing an HIA or MBA contract.
I always believe that the HIA/MBA contracts aren't bad ONLY if the builder is reputable and not dodgy. Yes it's favoured to the builder but unless they've added their own clauses to it, I think it's reasonable.
A contract isn't worth the paper it's written on if the other party is a scumbag crook. If a builder breaks the contract, you can take them to court but you'll be up for so much in expenses, stress and hair-pulling. You'd very much rather a builder who is reputable who you know will stick to the contract.
There is no way in this day and age builders or consumers want to go it alone with the legal minefield of their own building contracts and I'd be very wary of one off building contracts proposed by your builder rather than HIA or MBA contracts.
For what its worth (and noting that the OP is already clearly locked in to the HIA contract), standard conditions of contract for building works put out by consumer protection bodies shouldn't be described as a "one-off". They are an alternate standard put together by people who aren't biased in the direction of either the builder or the client. The use of these terms seems less common in volume builders who tie their attractive prices to the use of favourable terms but other parts of the industry will be open to using them.
Good luck OP – read the variation clauses carefully and know your rights (and obligations!).
They are an alternate standard put together by people who aren't biased in the direction of either the builder or the client.
You're living in the past my friend as HIA and MBA building contracts comply with the requirements of Consumer Law jurisdictions and those industry bodies would have been instrumental in guiding the public circus in setting them up. As I said be careful of contracts that don't bear the imprimatur of HIA or MBA as they could fall foul of the Law and get you into costly legal bunfights.
Here's the NSW Fair Trading version OP-
http://www.fairtrading.ns
Now pull out your HIA contract and you tell me how it short changes your rights compared to that. The real problem is not builders who present you with HIA or MBA formal contracts including Small Works Contracts but the builders and tradeys who work on handshakes and she'll be right mate.
You're living in the past my friend as HIA and MBA building contracts comply with the requirements of Consumer Law jurisdictions...
Compliance with the law is no guarantee of fairness or equity. Your statement of living in the past is also condescending and unhelpful. Obviously the Fair Trading terms are also compliant with the law even though it offers different and I would argue superior outcomes for consumers so compliance with the law should be a given.
As I said be careful of contracts that don't bear the imprimatur of HIA or MBA as they could fall foul of the Law and get you into costly legal bunfights.
Absolutely be careful with dodgy contracts but please don't try to pretend that the HIA and MBA contracts are the only valid contracts that people should consider. There are other terms that offer better outcomes – why are you promoting this blinkered view?
Now pull out your HIA contract and you tell me how it short changes your rights compared to that.
OK well – lets take payment for example.
HIA:
The owner has no right to set off progress payments for work which is the subject of a disagreement
Fair Trading:
the parties agree as follows:
(a) the owner may withhold from the progress payment, an amount
estimated by the owner, acting reasonably, equal to the owner’s estimate
of the value of the disputed item
(b) the contractor must continue to carry out its obligations under this
contract pending resolution of the dispute.
What do you think is better for the consumer? The right to withhold payment given a dispute or the obligation to pay no matter what?
What do you think is better for the consumer? The right to withhold payment given a dispute or the obligation to pay no matter what?
The HIA one because the owner is ultimately protected by Consumer Law and the contractual terms. The consumer by withholding payment may well be tying the hands of the builder to continue anyway as well as acting illegally and arbitrarily as it transpires. It's a live hand grenade waiting to blow up to the detriment of both parties. Better to let the lay consumer notify the builder in writing that they believe a contractual obligation has not been observed and let the professional judge whether that's true or not, carry on and take on the ultimate responsibility of that decision. That's what you pay licensed professionals for.
Absolutely be careful with dodgy contracts but please don't try to pretend that the HIA and MBA contracts are the only valid contracts that people should consider.
I'm not but if you think the lay consumer and public servants in Fair Trading can do better than HIA or MBA licensed builders and their contracts then get them to build the house as you seem to think they know best when to call a halt to proceedings and let's all trot off to Court. Bear in mind here the banks are usually forwarding the progress payments and they have some interest in what's going down so things can get pretty messy real quick with a lay consumer having the power to make the call anytime on behalf of all the parties. Then watch all those Fair Trading experts duck for cover.
Your suggestion that it is better that the owner be forced to pay amounts for areas under dispute is absurd. There is a long demonstrated history of builders losing all interest in fixing problems once they have been paid and leaving consumers with incomplete or defective work. It is interesting that you don’t even contemplate the other alternative of the builder actually proceeding to fix the disputed or defective works and instead claim that the parties must go to court. That isn’t how things should work but unfortunately the building trade often attempts to intimidate their customers with such threats which are mostly bluff and bluster. Your approach is consistent with that.
Also – your suggestion that withholding payment is illegal or arbitrary is incorrect. Payment in accordance with the contract provisions of the Fair Trading contract is neither illegal nor arbitrary. There might be circumstances where clients act arbitrarily but this is unrelated to the discussion we are having about contract terms and conditions. This was just an attempt to throw a red herring into the discussion. Please stick to facts. If you are going to make assertions, please back them up with some kind of reference or basis
Do I think Fair Trading can do a “better job” than HIA or MBA? If you judge a better job as resulting in a better outcome for consumers then I absolutely think they can. Your comment about “let them build the house” is irrelevant – nobody is suggesting that anybody other than a builder should build a house. Bluster also doesn’t contribute anything meaningful to the debate.
As far as involving the banks is concerned – their interest is generally aligned with the home owners. They want their home loan to be backed by a quality, valuable asset. The better the contract terms support the achievement of that goal, the better the interests of the banks will be protected. Clear communication of the use of contract mechanisms should keep all the parties on the same page – there is no reason that the involvement of banks should direct parties to use HIA/MBA.
For clarity – do you work in the building industry? Your commentary appears strongly biased in favour of the industry in a way that a consumer would not be.
Thanks, we have a separate document that outlines what will be in the build that we have been watching very closely for accuracy and price.
Just make sure this document is properly referenced within the contract itself.
Also watch out for the building adding in pages with 'special conditions' or the like...
Read the contract thoroughly and make sure you understand what is written. If you don't get the jist of it, then consider seeing a solicitor (if you used a solicitor for your conveyancing then they would be a good option to go to).
As others have also said, the contract does tend to favour the builder and the builder will likely not budge on almost all of the terms in it. Anyone that thinks an industry association funded by builders doesn't write the contracts weighted more so in their favour are dreaming...
Better to let the lay consumer notify the builder in writing that they believe a contractual obligation has not been observed and let the professional judge whether that's true or not, carry on and take on the ultimate responsibility of that decision. That's what you pay licensed professionals for.
Builder might be licensed, but I wouldn't always call all of them professional!
Nothing motivates a builder to do the right thing moreso than not getting paid until they do.
Good luck trying to find a voulmn builder that dose not use HIA contract. You will be limiting yourself of house choices. If you want something other than HIA, than try private custom home builders.
To the OP I'd say thousands of homes and renovations get completed each year without any problems although if you glue yourself to current affairs programs you'll end up like a doctor thinking everyone's unwell. You're very well protected with HIA and MBA building contracts nowadays and they save you having to engage a lawyer if every builder did their own thing, not to mention the expense for the industry. Also you have Homeowners Warranty Insurance should the worst happen.
Probably the largest area of concern or conflict for consumers is not clearly understanding those prime cost and provisional sum terms and hence my advice that you peruse them carefully before waiving your cooling off rights. Apart from that you need to understand something important. You're handing over the property completely into the hands of your builder to carry out their professional undertaking and you have no right to even be on the property without their permission during that time.
So bear that in mind and don't whatever you do go onto site and start telling tradeys what to do and keep a friendly working relationship with the supervisor Metricon allocate you. Whatever you do don't call a stop to the process without being very sure you're on solid ground with some very strong professional backing or you could find yourself in real hot water. By all means discuss your concerns with the supervisor and back it up by written letter to the company itself (even copy in the bank)but it's the builder's call unless you have professional and legal advice otherwise.
In that respect understand the progress payment system and your undertaking with your financier. They will largely take the professional word of the builder with progress payment demands and invoicing anyway, unless you have some big guns to show why they shouldn't.
Lastly understand what Practical Completion means and key handover. It means ready for safe and hygienic habitation and not necessarily until every minor defect has been attended to. For example if the sink wasn't connected up or the HWS not working you'd have every right to call not ready but not for some missed paint, dings in a benchtop and the like. It's practically complete if they missed some paint in the corner of a ceiling but not if its water stained from a roof leak if you get my drift. On the day you go round and mark down any such minor defects on the sheet the builder needs to rectify and they have to just like they have to warranty any further problems for 5 years.
Don't let others who have no interest or qualifications in the process wind you up with trivialities and what they'd do with wotif,etc but understand the interests of both parties and the respective obligations within the contract.
You're very well protected with HIA and MBA building contracts nowadays and they save you having to engage a lawyer if every builder did their own thing, not to mention the expense for the industry.
For the avoidance of doubt, nobody in this thread has suggested "doing your own thing" when it comes to contracts. The debate between you and I has been about the merits of alternate T&Cs, specifically the NSW Fair Trading terms. No lawyers are required by either party for these terms to be successfully used. On the other hand, we have, in this thread, noted one of the multiple examples of poorer consumer protection arising from the use of HIA terms. Sure – the volume builders will stick to HIA/MBA and set their pricing based on the use of those terms but there is no reason that alternate, better for the consumer terms can't be used in domestic building. You shouldn't fear-monger this approach. I'm not saying always use other terms, just be aware of the differences and don't assume that HIA/MBA are intended to be a balanced consumer friendly contract
Don't let others who have no interest or qualifications in the process wind you up with trivialities and what they'd do with wotif,etc
If this is a reference to our discussion here I invite you to show your evidence supporting the assertion of others having "no interest or qualifications in the process". On what basis have you determined that? How do you know the interests and qualifications of all other people commenting?
Again – could you clarify your involvement in the building industry?
Again – could you clarify your involvement in the building industry?
Did you offer the OP any of the advice I've given him and do you have any problem with its veracity? You seem to be stuck in current affairs mode rather than offering some real pointers on understanding what it is he's contracting for with a professional building company.
Again – could you clarify your involvement in the building industry?
I was a long term member of the HIA
Did you offer the OP any of the advice I've given him and do you have any problem with its veracity?
Yes – clearly I do have an issue with some of the advice you've given. It is pretty clearly identified in each of the posts and mostly relates to your promotion of HIA terms. The general contract advice seems ok but leans to much towards the "you don't know what you are doing so just trust the professional builder" which is what someone on the builder's side of the industry would say. You have, in other posts, provided some reasonable advice about other contract elements and I have made no comment on those parts.
You seem to be stuck in current affairs mode
What does this even mean? If it means challenging you on the questionable statements you have made then yes – correct. If it means something else – please clarify. I think you might be trying to use that term in a derogatory fashion which, frankly, is consistent with the other statements you have made all along instead of just constructively participating in the discussion.
rather than offering some real pointers on understanding what it is he's contracting for with a professional building company.
Pointers provided in post 5,12 and 18 before (and while) this became an off-topic wrangle. Another incorrect assertion.
You're very well protected with HIA and MBA building contracts nowadays
I don't think so at all. For example, a HIA contract puts the risk of hitting rock to the owner, as it should.
Say the builder hits rock during their build, and it costs them $20k to remove.
The HIA contract allows the builder to charge the owner $20k + 20% builder's margin = $24k for something that cost him $20k to do.
Do you think that is fair that just because of shitty luck, the owner is stung an extra $4k and the builder gleefully takes an extra $4k into his pocket?
Good luck trying to find a voulmn builder that dose not use HIA contract. You will be limiting yourself of house choices. If you want something other than HIA, than try private custom home builders.
This. One can bang on as much as they like about whether or the HIA contract is fair but a builder has the right not to build for you under another contract.
The main concern can be variations because the layman can't argue with the builder about construction methods and costs. This is why i recommend a supervising architect – usually save their 7% in savings of time, cost and disputes – and wear and tear on you.
Do you think that is fair that just because of shitty luck, the owner is stung an extra $4k and the builder gleefully takes an extra $4k into his pocket?
Yes as it's not the builder's fault and the consumer has a choice to do the site preparations themselves beforehand or engage a different contractor to do it under the same terms. Welcome to provisional sums unless you want some sort of mandated insurance scheme to spread the costs across all homebuyers. I'd caution against that lest it create moral hazard like people building in flood plains and wanting others to share the insurance cost.
The main concern can be variations because the layman can't argue with the builder about construction methods and costs
Variations largely due to site difficulty must be reasonable under the contract so they can be challenged.
This is why i recommend a supervising architect – usually save their 7% in savings of time, cost and disputes – and wear and tear on you.
So you're buying a $300k home with a volume builder like Metricon and you want buyers to shell out $21k for an architect to second guess them? I think you need to chat to Eule about that ;)
Welcome to provisional sums unless you want some sort of mandated insurance scheme to spread the costs across all homebuyers.
Straw, meet your grasper.
So you're buying a $300k home with a volume builder like Metricon and you want buyers to shell out $21k for an architect to second guess them? I think you need to chat to Eule about that ;)
It's a suggestion and it's up to you, your building knowledge and the value of your time arguing with the builder. My architect saved his fee with the resolution of one dispute (cantilevered balcony).
My architect saved his fee with the resolution of one dispute (cantilevered balcony).
If you were employing an architect for a custom build why wouldn't you use them as principal to supervise the subbies they often have at their fingertips? There is a role for architects in that regard but the OP is signing up for a production line home where all the quantities and costs are sitting in the computer and you can't build the same house cheaper than the likes of Metricon and they know their stuff. Horses for courses but Metricon don't need the OP or anyone else hovering over them any more than the OP's mech shop does when he drops off his car for servicing or repairs.
Oops I almost forgot you can't use an architect with their dodgy contracts ;)
"The Australian Building Industry Contracts (ABIC) are jointly published by the Australian Institute of Architects and Master Builders Australia.
ABIC contracts are intended for use in building projects where an architect administers the contract. They are designed to make contract administration clear and less prone to dispute or time-consuming negotiation."
a production line home where all the quantities and costs are sitting in the computer and you can't build the same house cheaper than the likes of Metricon and they know their stuff.
Perhaps I don't know, but 10% in variations on a custom built home is not unusual. This is my experience from doing hundreds of progress payments for banks.
As a general rule the cheaper the contract price the more likely the builder will try to catch with variations. Therefore it is not always wise to accept the cheapest quote. A good way to sort them out is to say you have an architect supervising even if you haven't. Mr Dodgy will run a kilometre.
Perhaps I don't know, but 10% in variations on a custom built home is not unusual.
You're correct in noting the difference in variations charging for custom builds vs off the plan volume builds and I'll explain why that is (I was in the upmarket custom building sector by the way). Volume builders like Metricon have their plans carefully tailored to minimise materials and waste and onsite trade labour and everything is computerised including the scheduling and your supervisor is running hard with that schedule and organisation over many homes with their tight margins. You want them to step outside of that with one off special orders, scheduling and instructions to trades then you have to pay dearly for that in relation to their business model as they know full well that creates headaches and stuff-ups.
Hence they'll price accordingly to actively discourage you from doing that, as well as making you pay the full cost of all contingencies. With custom builds you're already paying a premium for all that in the whole build so variations are a lesser cost in the big scheme of things, as are clients wallets when the little lady decides onsite it's not like she pictured it from the plans and can you tear it all down and do it like this. No problems maam looking quizzically at hubby who already knows he's paying for the best trades and materials and it's cost plus 10 again.
With volume builders It's like asking Holden's to stop the line to make you a special order vs asking the Ferrari dealer to add a few special appointments like your favourite Bose system. Suppose the little lady wants a bigger window or sliding door with the Metricons? Problem is they have all their standardised windows and doors planned so the whole house is brick coursed and the brickies don't have to cut bricks and they know that with their pricing per thousand but now it's a different lintel and the bricky has to bring a brick saw for the job and charge accordingly. The custom build already has that factored in.
As I said, with volume builders like Metricon you get excellent bang for buck but understand what it is you're buying. It's a production line home built on your block.