[jess]

Bit of a warning. This article was in today's Kapiti News. The family interviewed had their building contract looked over by a lawyer, but then paid the builder directly. The company has since gone under and they have so far not recovered their deopsit...


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[CjChris]

Thank you for the alert, Jess. This is exactly the kind of information we all need as a reminder not to be so trusting! Those poor people!! :mad:

[Ana&Steve]

Yes, thanks for posting that! Very scary and sad.:no
I wonder what kind of lawyer one needs to hold the money, and is it gaining interest at that time?
Ana

[jess]

I wonder what kind of lawyer one needs to hold the money, and is it gaining interest at that time?
Ana I think it's the same as when you buy an existing home, and you give the deposit to your lawyer (ours was a property lawyer) once the contract goes unconditional. Even though it doesn't get handed over to the seller until closing, as far as the buyer's concerned, that money's spent. (Our $ did not accrue interest once we gave it to the lawyer, and it was about 5 weeks until we closed the sale.) Similarly, I don't think the deposit for a new home would accrue interest while your house was being built either (unless you count the interest the lawyer might get while holding it :p)

[Ana&Steve]

Thanks jess! Every single scrap of knowledge helps!
Ana

[Caroline and Dave]

As most of you know we are building our own house and are paying the builder direct for the various stages once planning permission goes through.
We contacted our Solicitor re this and this is part of the reply we received

Quote: The primary concern to ensure you are protected is to monitor the progress of building works and ensure that work has actually been done to the appropiate stage before a progress payment is made.Essentially,progress payments should be in arrears so you are only paying for work that has already been done (Or materials supplied)

There is No particular advantage in using a solicitor to make payments(without taking the other precautions discussed above) as once the money has been paid to the builder it would be lost if the builder went bust in any case Unquote

She then goes on to say that they do not believe there is any concern with the builders we have chosen and advised us that it was not beneficial to get them to pay the builders.They do advise however to get someone independent of the builder to advise how the building works is progressing although we will probably do this ourselves.

Hope this bit of info helps

Kindest regards

Dave and Caroline

[jess]

The primary concern to ensure you are protected is to monitor the progress of building works and ensure that work has actually been done to the appropiate stage before a progress payment is made.Essentially,progress payments should be in arrears so you are only paying for work that has already been done (Or materials supplied) Good clarification. :nice1 The main thing is paying after work has been done instead of in advance as your lawyer suggested. If you pay the builder directly after you've gotten the results, then you're covered, because you know the work has been done.

The reason people often give the money to the lawyer up front is because many builders don't want to wait to be paid after work has been done unless they have proof that that you will be able to pay. Giving the money to the lawyer in advance shows them you have the money, even though the builder doesn't actually receive it until later when they've delivered. It's a safety for the builder that allows them to feel comfortable with being paid after they work.

If you have a builder who is ok with being paid in arrears even though you haven't put money up in advance to be held by a lawyer, then you are fine. The builder is taking all the risk. The problem for the family in the article was that they gave the money directly to the builder before any work was done.