A building dispute can be very complicated and exhausting to deal with. But it is only difficult if you don’t seek the legal advice of an expert. So before getting involved in a building project, what do you need to know about building disputes?
Construction is a high-stress, high stakes job. It definitely is hard work, and it surely takes a lot of time and effort for a project to work out seamlessly, stay on budget and on schedule. Home building can be quite a costly investment- both for builders and homeowners. More often than not, things do not go as initially planned and it can’t be helped when two parties cannot resolve construction issues by themselves.
A building dispute arises when a party to a construction contract fails, or is perceived to have failed, to comply with their legal or contractual obligations to a contracting party. This can be a builder being unable to comply with the construction contract he has with a homeowner or client. And vice versa.
Home construction is definitely a big investment and building disputes that lead to court proceeding can be emotionally and financially draining to the parties involved. Getting the right legal advice early on and managing building contract disputes efficiently can help minimise the impact they have on a construction company’s profitability and a homeowner’s construction goals.
Whether you are the homeowner, a builder, or a subcontractor, you can be sure that a specialist building and construction lawyer can help you navigate through this challenging phase of your construction project. Building disputes can be managed and resolved. Contracts Specialist can help you enforce and defend your legal and contractual rights.
Our specialist construction law firm in Sydney has dealt with a bounty of cases of residential building disputes, as well as a variety of other construction-related issues. In our experience, these are most common causes of the cases we have handled.
1. Non-payment, under payment, and late payment for works completed
A homeowner engages a builder to carry out construction work. The builder then performs the work and sends a claim for progress payment. However, in some cases, the owner either denies payment or reduces payment of the builder’s claim for reasons like:
a. the builder did not provide proof/evidence of completion of the works;
b. the builder did not have the work approved or certified or provide the owner with a copy of the certificate; and/or
c. the builder’s work is incomplete and/or defective.
Builders and contractors rely on payments from their customers to manage their cash flow. Often, home building construction contracts require frequent payments (sometimes weekly or fortnightly). In some instances, an owner may pay late, which makes the owner liable for interest if such interest is specified in the contract.
There are also many reported instances when homeowners or contractors refuse to pay builders for work already delivered. This causes so much stress to builders since they too have bills and people to pay. Cash flow is king. That’s why timely and correct payments are what builders rightfully deserve.
2. Disagreement as to the scope or quality of works
Under a home building contract, the scope of the builder’s work is required to be described and include drawings, plans, and specifications.
Often, the parties have a building dispute when the builder claims that the work is a variation (or not part of the scope of works) and asks for extra payment. This can mean substantial costs for the homeowner, since most construction contracts allow the builder not only to claim for the cost of the variations but also a builder’s margin.
On the other hand, there are times when the homeowners have unreasonable expectations. They want expensive and grand materials that are way beyond their set construction budget. Sometimes, they ask for building results that would require extra work to be done for free.
In some dispute Contracts Specialist has handled, the fault is with the builder. Some builders deliver work less than what was promised and written in the construction contract. This puts homeowners in a less than desirable position since they did not get the quality they expected for their dream home.
Contracts Specialist can help deal with these types of building dispute. We are knowledgeable in the Home Building Act 1989. We will go over scope of work stated on your building contract, explore all your legal options, and guide you through litigation.
3. Delay with progressing with the work or abandonment of works
Slow progress and delays in completing a construction project can have a significant financial impact on the homeowner and the contractor.
When a building dispute concerning construction delays or flat out abandonment of the project cannot be resolved by the parties themselves, it may fall to the courts or arbitrators to determine which party or parties are responsible for the delay and who must bear the increased costs caused by it.
Under the Home Building Act, the builder has a warranty to complete the works within the time required by the home building contract, or if there is no time specified, within a specific timeframe.
Under a construction contract, the builder may have the right to suspend works if the owner is in breach of the contract (for example, the homeowner does not give the information or instruction required to allow the builder to continue with the works or the owner failed to pay the builder).
If the builder encounters delay in carrying out the work (for example it rains or it is too hot to carry out the works safely or the builder cannot find the materials required by the homeowner), the builder is required under a construction contract to inform the homeowner of the delay (including why there is a delay and how many days the builder estimates the delay will last) and claim for an extension of time to extend the period for the builder to complete the works.
Contracts Specialist can assist clients- whether they are homeowners, contractors, or builders- deal with such a building dispute. We can look over your situation, delve into details of the issue, and carefully guide you through litigation or court proceedings. We will determine if it also might be possible for you to claim damages.
4. Poor communication between the parties leading to relationship failure and then giving rise to points 1, 2, and 3 above or a combination of those
Communication is critical to a construction project’s seamless execution and ultimate success. Poor communication between parties can lead to relationship failure, and this then gives rise to points 1 to 3 above, or a combination of those.
A building dispute commonly happens because of miscommunication, because of different expectations of the standard of the completed work, and because of not planning properly for things that might happen along the way. Contracts Specialist can step in and help you deal with your building dispute issue before it escalates into a bigger problem. We can help mediate negotiations with the other party if need be.
There are some types of people who would try to be patient and understanding even if a situation if turning sour. They keep giving the party another chance and just hope that the issue with their builder or client will eventually smooth itself out. If you find yourself unsure of your situation, check these warning signs and decide if you need to consult with a construction lawyer as soon as possible.
If you are a homeowner, look out when your builder asks for more money, if he is not completing the work agreed upon as per your signed construction contract, and is demanding early payments even though you’ve already set a payment schedule.
If you are a builder, look out for when homeowners ask for more than the agreed work, is asking for a higher quality and more expensive quality of work than what was stated in your signed construction contract. Be wary about late payments and under payments and being given random excuses as to reasons for them. These can lead to non-payments and that would be another major issue you would have to deal with.
Think of a building dispute as having a broken leg. It gets resolved when the parties either reach an agreement on the outcome (known as a settlement), or when a Tribunal Member or Court orders an outcome.
You need to deal with that broken leg the fastest and most efficient way possible, before you suffer from it longer. You need to deal with it quickly so you can go back to doing more important things.
Fortunately, not all building disputes lead to costly and time-consuming litigation or court proceedings. These issues can alternatively be resolved.
The answer is Yes. Parties involved in a building dispute can always opt to negotiate and settle instead.
You can always try to talk to the other party and see if you can reach a reasonable settlement and resolve the building dispute between yourselves. This may not always happen, but it would be good to at least try. If the building dispute is a first offence, a complaint can be lodged with NSW Fair Trading.
Word of warning though: if your professional relationship with the builder or homeowner has already been severely damaged, it is very likely that you will end up disagreeing more. It would be best to keep a calm demeanour and call on someone who has the expertise and experience to help you.
Your best and most logical option would be to seek the help of specialist building and construction lawyers who have extensive experience in construction dispute resolution, with the building disputes tribunal in NSW, and has dealt with various builder disputes solicitors. There are people who will try to take advantage of you and this can lead worsen your situation. A construction law expert can help point you to the right direction.
As specialist building and construction lawyers, Contracts Specialist will help you enforce and defend your legal rights– whether you are the homeowner, a builder, or subcontractor.
We work with construction law issues daily, and have helped numerous clients deal with their building dispute issues. To help you move forward and take the steps to put this building dispute behind you, give us a call or book a consultation to set a schedule that will be most convenient for you.
We will go over the scope of work stated on your building contract and investigate whether a breach has been made. We will explore all your legal and construction dispute resolution options. If things progress unfavorably, we will guide you through litigation and explain the process to you in a way you would understand. We will support you through this trying time and work towards a favorable result for your building dispute to the best of our ability.
Contracts Specialist’s Principal Lawyer John Dela Cruz is an expert in construction law and is very familiar with the New South Wales Civil and Administrative Tribunal (NCAT). He has extensive experience being a lawyer for residential building disputes and other construction-related issues, so you can be assured that you will be getting the right advice. You will be in good hands.
Contracts Specialist is a Sydney-based construction law firm that deals with Building Disputes, Construction Contracts, Debt Recovery, and Security of Payment. With Contracts Specialist, you are ensured that you are in good hands.