GG Developments

*Building Contract Tips and Tricks* - When did Construction Commence?

In this series of posts, we will share the common oversights of Domestic Building Contracts and how to mitigate them.

Whenever clients or friends have been concerned with progress and how their Build or Development is tracking the first question we ask is "When did Construction commence?"

A pretty simple question but often goes unanswered until well into the build if the Commencement Notice hasn't been provided or contains the inappropriate information.

Did you know in the Master Builders Contract is actually a requirement for the Builder to provide one?

Clause 8.2 of the Master Builders Contract states the following:

Within seven (7) days after having commenced to construct the Works, the Builder must give a
written notice to the Owner. The notice must state the following:
- The Builder has commenced construction of the Works under the Contract; AND
-The date on which construction of the Works commenced (the actual commencement date) ;
AND
- The Construction Period (as set out in item 9.2 K of the Appendix) started to run on that
actual commencement date; AND
- The Completion Date, having regard to the actual commencement date and the
Construction Period.

This letter can also assist if an 'Extension of Time' or a 'Suspension of Works' is requested as well as providing clear milestones for the start and finish of a build.

Disclaimer: Guidance only, not a substitute for legal advice.

Do I need a Building Inspector for my new home or Development?

Firstly, let's distinguish the difference between a Building Surveyor/Certifier and a Building Inspector.

A Building Surveyor/Certifier provides approval of the works undertaken as part of the Building Permit and ensures their compliance in accordance with the National Code of Construction (NCC).

A Building Inspector is an independent person who inspects the quality of work. The common inspections are as follows:

- Waterproofing
- Internal Framing (without plaster board)
- Fixing Stage
- Pre-completion
- End of Defect Liability Period

Although a Building Inspector isn't mandatory, a good one can offer a level of assurance and peace of mind. Their opinion is often used in VCAT cases.

Disclaimer: Guidance only does not substitute legal advice.

Our Step-by-Step Process

Step 5: Settlement

Just like in any Real Estate Transaction, this is the part where we settle and the sale is complete!

Although this process may take time, we do the hard work for you!

If you wish to enquire about our FREE appraisal for the sale of your back yard or even your whole house, with a longer settlement, please email [email protected] or send a message via Facebook Messenger.

Alternatively if you’re interested in your own Development, we offer a range of consultancy services to suit your needs and to tap into our year of experience.

Our Step-by-Step Process

Step 3: The Contract

So we’ve agreed on a price and direction for the Development. We now sign a contract.

Compared to a traditional Real Estate transaction, Developers use Property Option Agreements prior to completing the purchase of the house or land.

What is a Property Option Agreement? It’s a legally binding agreement between you and GG Developments to allow us to purchase the house or land at a later date whilst we commit to investing in Due Diligence Checks, Consultants, Town Planning Approvals, Section 173 agreements with Council and the Subdivision Process. (Step 4 goes into detail)

A Property Option Agreement also means you will receive a non-refundable (that’s right it’s yours to keep!) option fee from us for entering into the agreement regardless of the end outcome. Disclaimer: Option Fees may be subject to Capital Gains Tax. Please seek independent Tax advice from a suitably qualified professional.

A Property Option Agreement is required for rear yard sales due to the new individual title not existing yet which is a requirement for the contract of sale.

The Contract of Sale is attached to the Property Option Agreement and follows on once the option is ‘exercised’ (This is Step 5!)

A typical Property Option Agreement lasts for 12 Months depending on the nature of the proposed Development.

If you have chosen to Joint Venture or provide Vendor Finance these agreements are drawn up at this stage.

Once all the contracts are signed we move to Step 4: The Development Process

Our Step-by-Step Process

Step 2: Title Review, Initial Offer and Negotiation.

You receive our initial offer…..now what?

We review the Title and discuss the offer in more detail and negotiate to suit your needs.

The initial offer is just a starting point and to provide you with an indication of what we may be willing to purchase your house or land for.

This is the stage where all parties can get creative.

Are you Downsizing but want to stay in your suburb?...We could provide you with a first option on one of the new homes or we can coordinate the design and build of your new downsized paradise.

Investment opportunities?...Vendor Finance or Joint Venture is a possibility.

Have the appetite to take on the Develop yourself but require some assistance?....We can provide consultancy services to suit your needs.

Once we have agreed with a direction and a price and there are no restricting covenants on the Title, we move to Step 3: The Contract