Delays in finishing your build? A guide for homeowners

If you’re building a new home, it is frustrating when work is supposed to be completed by a certain date but there are delays by the builder.

What do you do if a builder fails to show up to the site, progress the work, won’t take any of your calls or respond to your emails? The answer is in your building contract.

Firstly, you will need to decide whether you want to terminate the contract or compel the builder to perform the contract (complete the build).

1. Terminate the contract

If you want to terminate the contract, you must ensure that the building contract is properly terminated prior to excluding the builder from the site or engaging another builder.

By excluding the builder or engaging another builder without terminating the contract properly, you run the risk of breaching the contract. This kind of breach is known as repudiation and could mean that you could be made to pay the builder the balance of the contract price.

The process for terminating the contract will be found within the contract’s terms.

Under standard contracts, you may be required to serve the builder with a notice stating:

(a) the default (for example, time); and

(b) requiring the builder to remedy the default within a certain period; and

(c) notifying your intention to terminate the contract if the default is not remedied.

Notice should be given to the builder according to the terms of the building contract. If notice is not given according to the terms, you may be found to have repudiated the contract.

Usually, once the notice period expires, you can terminate the contract with no further notice to the builder. However, you will still be liable to pay the builder for any work reasonably performed under the contract because of the principle known as quantum meruit.

2. Compel performance

You may instead want to compel the builder to perform the contract. If you do, you must ensure you comply with any conditions of the contract known as ‘conditions precedent’. On standard contracts, conditions precedent may include:

(a) providing evidence of title to the land

(b) providing evidence of your financial ability to pay the contract price

(c) payment of the deposit

Once you have ensured you have complied with the conditions precedent, if the builder fails to progress the work, and depending on the terms, you may be able to serve a notice to terminate the contract.

If you would like advice regarding your building contract, please contact us.

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