3 Month Delay to New Build and Ending Up Significantly Out of Pocket

saajan_12

sh856531 said:

You have signed a contract with the house builder were they have told you what they might do. ( delay by anything up to  6 months)
I am sorry to say you have no reason to complain and the builder has done nothing wrong
In hindsight you should have had a penalty clause

We have signed a contract, this is true. However the builder has also agreed to follow a code of conduct which it is breaching.

Specifically it has agreed to only enter into "fair" contracts. I would say a contract where the builder can do whatever it wants for 6 months and then demand immediate payment with 2 weeks notice is clearly "unfair" because all risk is born by only one party. - no one's saying do whatever they want for 6 months - getting building materials is genuine causes of delays, not the same as randomly deciding to go on hol. They actually carry significant risk from teh long stop - they could have agreed a sale, incurred costs on the basis of that completing at that level. Then if they're hit with 6 months of delays, they have to spend time remarketing, the market may have repriced etc. Of course not that you should bear that risk either, but there are risks on both sides.  

It also breached the code as it is required to provide accurate and realistic timescales for completion. I would not say moving dates forward and back 4 times and by missing your initial estimate by 3 months meets any definition of accuracy I'm familiar with. - Then maybe you're not familiar with house building. A large project could take years, so being +/- 3 months on that probably is within a reasonable margin of error. 

As I mentioned in my initial message. I understand the legal position. But this is why we have organisations such as trading standards regularly striking down contracts that are unfair. Their is a recognition in law that enormous corporate entities abuse their power and that just because something is in a contract, doesn't make that contract legally sound.

As an example, you mentioned that I should have had penalty clauses. Have you ever tried to even discuss modifying contract terms with an organisation with a FTSE 100 company? It doesn't really work like that and consumers need to find different avenues of recourse to make sure they are not constantly disadvantaged by much more powerful entities 

Contract sounds fair to me, people do negotiate with house builders, but if they refused then you could always walk away. 

sh856531

user1977 said:

sh856531 said:

You have signed a contract with the house builder were they have told you what they might do. ( delay by anything up to  6 months)
I am sorry to say you have no reason to complain and the builder has done nothing wrong
In hindsight you should have had a penalty clause

Specifically it has agreed to only enter into "fair" contracts. I would say a contract where the builder can do whatever it wants for 6 months and then demand immediate payment with 2 weeks notice is clearly "unfair" because all risk is born by only one party.
 

That's all utterly normal. If that were deemed to be "unfair" then it blows a hole in almost every housebuilder's contract. I doubt that's going to happen (or that somebody hasn't already had a shot at it).

Normal is not the same thing as fair. 

It is normal for well paid lawyers to stake out fairly extreme positions in contracts that are well in excess of what would actually be supported by law when tested in court. To take another example, you may well have extensive non-compete clauses in your employment contract - your employer knows full well that they are un-enforcable in all but fairly limited circumstances - but they will be there regardless.

This is why we have Financial Services Ombudsman's, Trading Standards, The Consumer Protection from Unfair Trading Regulations and so on. It is also why we will soon hopefully get a New Build Homes Ombudsman.

If it were as simple as we can write whatever we want into contracts and then that's that, we wouldn't really need any of the apparatus that the government obviously creates to redress the imbalance of power between a single consumer and a massive company.

sh856531

ssparks2003 said:

If you are not looking for any form of legal recourse, are you looking for illegal recourse? 

There are a number of recourses available in disputes that do not involve lawyers. Referring to the Consumer Code for example or using impartial bodies to resolve disputes without resorting to involving lawyers.

sh856531

TBG01 said:

Did you think it was "unfair" back when you signed the contract? If so why did you continue? 

I did think it was unfair before signing the contract and I both raised it with the builder and asked my lawyer for his thoughts. 

As to why I continued - it was a calculated risk of a sort we all take when entering into an agreement with a much larger and better resourced provider of a service. As has been noted, these sorts of one way agreements are extremely common amongst all house builders. If you want to buy a new build house you effectively have to deal with a limited number of suppliers who all have enormous legal departments. They won't enter into fair contract terms with you as they don't need to. So when we asked what recourse we have if they were to be completely wrong about their build date - they said "trust us - that never happens". With some companies you can take them at their word and with some you can't 

So what all home buyers do, assuming they understand the danger is they try and deal with companies that we hope will act fairly and that are signed up to codes of conduct that prevent abuse regardless of punitive contracts

gettingtheresometime

sh856531 said:

user1977 said:

What are the reasons for the delays? Are they actually within the developers' control?

Difficulty with getting building materials etc

I think the question of whether this is within their control is a tricky one. On the one hand we can blame the pandemic for everything.

On the other hand they are a enormous corporation with significant resources available to them to mitigate risks and there is little that would not have been known to them in February with regards to the pandemic. They knew there was a building boom going on and they should have managed their resourcing better in my view.

Many thanks  

It's not only the pandemic - it's brexit as well.

We work with construction companies and everyone is having a nightmare getting raw materials and if they can get raw materials, the cost of them have increased massively.

On a much more scale we've been trying to get concrete for a project on our property and I think it would be easier to find hen's teeth.

sh856531

saajan_12 said:

A large project could take years, so being +/- 3 months on that probably is within a reasonable margin of error. 

I would agree with that if the estimate was being given 9 - 12 months in advance. However I don't think that holds when the purchase is being made 3 - 4 months before completion. 

We were told point blank that they would hit the date to within 2 weeks and we were being told this 90 days out. In fact, they actually brought the completion date forward, before then moving back and back and back again

sh856531

gettingtheresometime said:

It's not only the pandemic - it's brexit as well.

We work with construction companies and everyone is having a nightmare getting raw materials and if they can get raw materials, the cost of them have increased massively.

Sure - I'm not unsympathetic and in fact if we were not being massively exposed financially - I wouldn't even raise it as an issue. I'm not one who just complains for "inconvenience" and normally I would be at least largely in the "well you signed the contract didn't you?" camp.

I do feel however that the builder has breached its own code of conduct around providing accurate estimates. I also expect a very large business signing contracts in February to have a very strong understanding of whether it can achieve what it says it can. 

bramptonbrew

You said the expected completion date was mid-June. Is this the long stop date in the contract? Or just a verbal "we think this is when it will be completed"?

We are in the process of buying a new build - completion for us has been listed as July-Sept in the contract, with September as the long stop date.

Ever since we reserved in January, the developer has told us verbally "it should be ready by June," but never in writing. It's looking like it'll be July after all for our completion - it's annoying that they've given us the impression we'd be in by June (and therefore not need to pay stamp duty), but it was never legally set out or promised in a way to give us recourse - so we just have to suck it up! We are lucky that we are renting and our landlord is flexible (and had budgeted for stamp duty just in case).

sh856531

bramptonbrew said:

You said the expected completion date was mid-June. Is this the long stop date in the contract? Or just a verbal "we think this is when it will be completed"?

It was the Estimated Completion date in the contract. It was also the date that the sales rep gave us the hard sell around in terms of how [insert name of house builder] never moves the date by much so we have nothing to worry about....

user1977

So when is the longstop date? Obviously you've got a rather better negotiating position if you offering to not exercise your right to walk away, but not sure if you're hitting that yet.