When builders go in to liquidation

When Builders go in to Liquidation

Posted  on June 7, 2016

Earlier this year, Stonewood Homes went into liquidation with more than 100 homes in Christchurch under construction. This left customers uncertain as to when their builds will be completed.

Unlike a number of builders, Stonewood Homes offered Master Build Guarantees meaning that Registered Master Builders has assured customers that their builds will be completed. However, not all builders offer independent guarantees.

If you are contracting a builder who does not offer a guarantee, it’s important you do thorough research. In particular, you should negotiate:

  • Progress payments: You should only pay for the value of work which has been completed at each stage of the build process. This ensures that if anything goes wrong, at least you have only paid for what is ‘on the ground’,
  • Insurance: Builder’s insurance needs to be viewed in light of all projects the builder is involved with. It may be that what seems like ample coverage when expressed as a total insured amount over all builds, is actually insufficient when divided between that builder’s various build projects.
  • Timing: Always allow for unexpected delays when budgeting. Although Stonewood customers have been assured their builds will be completed, many will be paying both a mortgage on their already-made progress payments as well as alternative living expenses while they are unable to occupy their new homes.

When choosing a builder, the availability of an independent guarantee should be a major consideration. However, even if your builder does provide a guarantee, it’s important that you comply with the eligibility requirements as cover is not automatic.

Every build is different and is a significant undertaking for most people. If you’d like more advice on your prospective build, please be in touch with us.