I’m excited $$ price is what I want, they told me everything will be great BUT IS IT?
This week I’ve had two examples of Verandah builders essentially cheating or deceiving their clients of their rights and government of tax. Quotes are written to reduce quote price, normal building conditions and contractual rights under the Victorian Building Act 1993. Their offers one over $16,000 one under were both deceptive and unlawful.
Victorian Building Code is for projects above $10K specifically are non-negotiable in terms of minimum contractual terms and conditions for BOTH parties so buyer beware when your builder omits items others offer naturally.
Example One: Project Cost Above $16k – Value of quote was $45K plus extras
This quote severely reduced client’s rights plus had such lack of detail except for a price that whilst cheaper to their competitors but there were some costly omissions plus adding items in as extras but not included in contract price, therefore, evading tax and consumer laws and conditions. Just some of the issues that a consumer may consider unusual plus unfair.
- No Insurance offered in quote – Home Owners Warranty mandatory if project above $16K – a cost reduction to competitors quotes of $1.2K or more plus gst.
- No Registration Noted – check your quote as only registered builders and building companies can enter into a contract above $10K, this ensures public liability insurance will be applicable and their registration is applicable for the project type.
- Deposit 50% required – only max of 5% is allowed for projects above $20K (10% for project below $20K) with split stage payment ‘s normally requested
- No detail of works – no specification of materials or concept plan or warranties noted.
- No details of terms and conditions by which quote may rely upon if a dispute arose.
- Interest @ 5% monthly (or x 12= 60% annually) – seems a tad over the extreme and clearly non compliant
Example Project Two: Cost Below $16K – Value of Quote was $15.9K plus extras
Rough Plan was provided – not real specification and handwritten statements appear to be overstated and unsubstantiated. No business address, relatively few project details, no declared terms or conditions just simply a range of poorly worded commitments plus some. strong buy now pressure.
What I did realize that a significant range of Items was noted as additional but not included in the project’s main price. These items formed part of client brief, so required by the client, were added to base price but not to be included the main permit price. This was curious as they had done a formal quote below $16K (just below the mandatory insurance requirement level saying $1.2K plus to competitors) but had another almost $10 plus of other work specific to completion of the project. This method was I can only assume to avoid permit tax and insurance cost. Very tricky indeed. If they misleading as a quote wonder what they like when building. Client faith will be needed to accept this quote.
- Plumbing – really an extra but as needed for roof so must be included in the building cost, not an extra? Very weird omission.
- Electrical – again compliance needed. If done during the permit stage must be included unless client total role to arrange, complete and cost from tradesman direct to client. But as builder doing must be included it’s that simple.
- Plans and Permits – owners do have the right to arrange and provide this segment again only if the builder not gaining financially from this segment and it’s not forming part of their works. But they are undertaking this process so should be included.
- No Home Owners Warranty Insurance – this cost of over $1.2K with builders margin and GST is a significant omission in cost but also warranty. Clearly omitted to deceive clients and get a break on competitors. This the reason price just under $16K with all the extras added outside permit price to escape insurance cost.
- No Business Address – certainly do not enter into a building agreement if no place of business with only a mobile number and a business name. Hard to get something solved if no place of business.
- No mention of specific products or manufacturers warranties. Yes, they provide their statement of a Builders warranty by that’s for workmanship, not products.
The reason Consumer’ Affairs and Victorian Building Commission provide regulations is to help all parties in ultimately having successful building outcomes that a fair to both parties. Those builders that try to break rules by deceptive practices certainly distort the vast majority of satisfactory outcomes. Reducing price to avoid insurance and tax costs doesn’t should be a warning sign.
What to do?
- So check out your builder don’t just believe the salesman.
- Are they really what they say they are. Check their history longevity, offices, displays all add to providing assurance and peace of mind.
- Review and compare quotes noting differences, Your council or the Victorian Building Commission (VBA) can provide insight into what should be included.
- Go to your builder’s offices, check out their product displays, review their manufacturer’s warranty and commitments. There far more to a price that just the number. No offices might indicate a lack of substance.
- Businesses with a proven track record strong with supplier support provide greater reasons to believe they can deliver the outcome you need.
- Odd requirements, clients tasks, added extras or omissions should raise warning signs. This includes pressure sales commitments, bagging competitors and discounts to buy might not really be the bargain you think.