Compensation for Construction Delays

dazzza

First of all I’d just like to wish everyone a Happy New Year, especially anyone on here who can help.

The back-story is I purchased an apartment off-plan in 2007 and its still being “built”. I had an email today to advise that the latest completion date of February 2009 has just gone out of the window due to the “weather”.

Originally, I was given a “forecasted” completion date of December 2007 and since then I have had correspondence that has given half a dozen different dates all of which have slipped by. Up until now I was fairly relaxed about it all. I placed a 10% deposit and fortunately I have the funds in place and I still want to complete the purchase. Today’s notice that February has just gone out the window has now broken this camel’s back.

I have had my “bar-room barrister” already tell me I’m entitled to compensation for the delay but can anyone give me clarification if this possible, what classes as an actual “delay”, under what circumstances and how much (if anything) can be claimed?

I’ve scanned through the contract and predictably there are no clauses or completion dates included and all of the correspondence I have all comes with a caveat such as “estimated” or “forecast” with any new completion date.

As far as I can see the developer has no obligation to any contracted date and has covered his bottom thus far but surely having taken a deposit the period of time he has to complete is not infinite or we’d all be taking deposits on new houses and laying a brick per year.

Many thanks in advance.

Dazzza

Doozergirl

Despite the wording all in a developer's favour, you can argue "reasonable" delays on the wording of these contracts, I'm sure. With a decent solicitor you might be able to render the contract useless and get your deposit back. Many builders have just stopped work until they find more sales and that really isn't 'reasonable', especially if those sales aren't forthcoming.

Consider whether it's compensation or the opportunity to pull out of the deal that you want Do you have a mortgage deal arranged - if so, what's the deal on that? How does the valuation compare to that of 2007?

Ilian2008

Hello, id have to see the contract. Its really common though. I used to act for developers and they never got it done on forecasted time. Is the developer a national one? Was the contract purely conditional upon the flat being completed and an NHBC/equivalent being produced? If so then the contract hasnt actually become unconditional. The problem is also how do you calculate the compensation? Are you renting? Did you give notice relying on the forecasted date and have to seek more expensive and endure more hassle moving somewhere else fro a miinimu 6 month tenancy?

This is a few things to think about. If you sent a snotty letter to them and said you havent kept to your part of the bargain i want my deposit back and terminate the contract then they will just say that no breach of the contract has occured. I doubt that the forecasted date was in the contract and i bet the contract will have a clause in it which is called an 'entire agreement' clause so that you cant refer to any other correspondence between youa nd the contract is the only document but as i said id need to see the contract.

The best argument to run would be the argument as above that you relied on what they said and you have acted to your detriment and seek a remedy but how far you get is another story. They will have spent your deposit of course.

Its often said you get more rights buying a toaster than a new build. The contracts are so one sided and the Developers usually refuse to accept any amendments. Not fair at all.

Best of luck

dazzza

Thanks folks for the info.

I will peel through the contract again this evening particularly for an ‘entire agreement’ clause.

To answer a couple of questions the developer is a national one but I’m dealing with the offshore branch that despite them being on rocky ground in the UK the offshore company remains fairly healthy along with a juddering but stable market over here. However, I suspect given the volume of empty apartments the developer has particularly in Manchester they are going to be fairly battle scarred and veterans in dealing with these scenarios. I’ve done some digging and they have a history of being aggressive with quite a few people who were in a horrible position due to the UK market and who I really do sympathise with.

I’ve also been ‘fishing’ this morning and had an acceptance by email that I was told the “wrong information” on the original completion date, which gives a little ammo.

I also know two addition people in the same boat as I am. All want to complete and all are frustrated with the delays. One thought we have had is to do a little digging (not hard in a small community) get a few heads together and offer to negotiate with them for compensation in exchange for completing on time and not seeking compensation via legal channels.

No doubt they have allocated the funds to other projects so the idea is 5-10 militant buyers dragging their heels could cause them a real headache and force their hand to offer 5% off.

Any thoughts/suggestions are appreciated..

pinkshoes

dazzza wrote: »

. All want to complete and all are frustrated with the delays. One thought we have had is to do a little digging (not hard in a small community) get a few heads together and offer to negotiate with them for compensation in exchange for completing on time and not seeking compensation via legal channels.

No doubt they have allocated the funds to other projects so the idea is 5-10 militant buyers dragging their heels could cause them a real headache and force their hand to offer 5% off.

Any thoughts/suggestions are appreciated..

Given your contract does not actually commit to any completion date, and only gives an estimate, then I'm not sure you'll get anywhere.

Our flat was 2 months behind schedule, and we completed the day before our mortgage offer ran out, saving us about £2500 over the 18 months due to interest rates going up.

Even if there's 5 or 10 of you dragging your heels, there's not much you can do that will cause them a headache. You can't pull out, as not only would you lose your 10% deposit, they would also sell your department for whatever, then chase you for the difference in price i.e. their loss, so this would cause them nothing but a mere inconvenience.

You could try pressurising them en masse for a completion date, and say that you'd like a contract signed by them agreeing to this date, and £100 a week compensation for each week delay after this date... but then again, the builder has no obligation to sign anything of the sort.

Your best bet is to make sure your own finances are in order (check mortgage offer won't expire), and keep saving.

ILW

New build apartmemnts in Manchester have generally dropped about 40% since 2007.
Are you sure your lender will come up with the funds on completion?

dazzza

The developer is fairly safe as I mentioned it’s offshore where the Market to date has slowed right down (4% growth last month) but hasn’t declined, yet. They are in some trouble in the UK but for all purposes it’s a separate entity altogether.

We are talking over 12 months in “delays” now from the original date and the developer has stated that we were provided incorrect information at purchase although as mentioned by Ilian that’s out of the window if there is an ‘entire agreement’ clause in the contract.

One legal process someone has mentioned is “making time of the essence” does this have any relevance?

I’m lucky enough that I’m in no great shakes, funding is in the bag and I do want to complete although I’m prepared to push them on the basis that I have (potentially) lost 12 months+ of rental income so kindly cough-up or start juggling the numbers. Worse case I get nothing and complete eventually anyway.

PasturesNew

Is this on the IoM?