It happens more than you’d think…Believing that they can save some money on GST or home warranty insurance, people try to do business through the back door by not signing a contract (ie. engaging a contract builder) – we even get people asking us “how much for cash?” The reality can be pretty harsh for those that do go down that path. Someone has to be responsible for the works carried out to your property, and if you don’t have a contract with your builder, you’re effectively an owner builder. Even if you don’t know you are.
This is a case study in not having a contract builder do your work:
We received an email from a solicitor asking for us to do a defects report for one of their clients on some works carried out by a builder (again without a contract). We arrived at the property to find that the owners didn’t have any paperwork at all, they couldn’t even really tell us what the scope of works were meant to be in the first place (making it very hard to even do a defects report). There wasn’t a written quote or draft plans of the works to be carried out – not even receipts for the money they had paid. What was clear was that she’d spent a lot of money ($80,000+) for major works that should have been put through Council (and weren’t) and she didn’t have any guarantees or warranties laid out. In hind sight, they weren’t sure if the builder was licensed. Even worse, they had now engaged a solicitor to try and chase it all up which would be costing more money in fees which they were unlikely to recover.
Recently we quoted a small renovation job locally and were told that the quote was too much. We then got the question, “How much for cash?” We explained the potential repercussions of this sort of transaction to no avail. Sadly, the job was not undertaken by us.
Contracts exist to protect both parties, assign responsibility and prevent misunderstanding in the future. When the quote is prepared, you as the client get a chance to make changes and prepare for upcoming (fixed-in-writing) costs. As the builder, we get the opportunity to outline scope of works, progress payments and timelines. If there’s no contract in the first place, it makes it very difficult to hold anyone to account on either side. The job can mysteriously “grow”, the cost can blow out for no reason, there’s no insurance if something goes wrong, the builder may never get paid, or the time frame can drag on and on, who knows why? It doesn’t work out well for anyone!
Don’t fall prey to the old “she’ll be right, mate” attitude. Saving 10% on the GST is no recompense for a poorly done job or one that ended up costing 20% more in cost blow-outs anyway. Make sure you engage a reputable licensed contract builder and get it all in writing.