Category Archives: Contracts

More variations

Each year, as the Silly Season commences, I get this foreboding feeling that time is rapidly escaping. Then the panic sets in. How on earth am I going to get all of that done in this little time?

This year we’ve got all the usual fan fare plus the house. We are in some kind of stage where just about every other day we get some variation or another requesting yet more money (on top of that “fixed price contract”). It’s frustrating because it doesn’t feel like anything is actually happening, except more requests for more money.

You may recall that we needed to pay to have a sewer peg out? Well, turns out that the house is close enough to the sewer to require extra piering. Bam, we’re charged $365 for the engineer to amend the drawing to show the impact. On top of that we’re charged $1380 for the additional piering.

Today we have been sent a variation for “council fees”. The variation is a little light on the detail:

“Council fees required in order to obtain CDC approval:

1. Road inspection fee, $95
2. Road administration fee, $43
3. Engineering fee, $96.”

That’s it. I don’t know about you, but I don’t think it’s fair to invoice someone for any kind of “fee” without explaining what that fee is actually for. So, we’ve asked them to explain them because we’re smart people who would like to know what “engineering fee” actually means.

All of these costs will need to be paid from our own cash stash because they’re not included in the fixed price contract, despite being predictable fees and charges.

We’ve also asked the builder to double check our kitchen quote is comparable with what the other kitchen supplier would charge (we had to do with Knebel, Timpelle is the other supper). Apparently the file has gone to estimating. They will no doubt come back after two weeks and say “oh yeah, it’s all good.” or “oh, we should have actually charged you even more so think of it as getting a discount.”

Other than that, nothing is happening as far as we can tell. The builder will have a 5 week shut down period commencing soon. I think a start date of Feb 28 is looking like a bit of a joke. I’ll have to check if they specified which year.

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It’s all settled

The bank sent us a text message at 3 pm on Monday to let us know that the land had been settled. We are now proud owners of a patch of dirt in Bungarribee.

I presume the next communications we receive from the bank will be a reminder to pay them back.

At the very moment we received the text we were discussing air conditioning with the air conditioner supplier. I have to admit, I have no idea about air con or how it works or anything. All I know is I’m frustrated when it doesn’t work and am happy to pay to make sure it does. I was impressed that James appeared to know what he was talking about, at least. He and the air con man discussed zones and controllers and masters and compressors and fans and outlets. I just had to pick which shape outlet vent thing I wanted (I don’t even know what they’re called). I picked the round one but I have no idea if that’s a good choice.

The air con package we got was a promotion the builder had when we signed up for a tender. It was half price and cost us somewhere around $6000. In our appointment we added an extra outlet ($330) and an extra thermostat controller so there would be one upstairs and one downstairs ($330).

The air con man told us a story about one lady who came in and was in tears by the time the appointment was over. It was all very expensive (lucky ours is half price or we would have felt the same way) and her builder had told her if she didn’t put it in now then she would have to get a crane to come and lift the roof of her house off to put it in later.

Basically, that’s not only untrue but downright impossible. Unless your roof is on hinges or something, good luck lifting it off with a crane. The air con man had to assure her that it was ok if she wanted to wait, there is always a way of putting it in later. Of course it would  be easier to do it on a new house, but that doesn’t mean its impossible to have an air conditioner installed afterwards.

Don’t let your builder, or anyone else, bully you.

Settlement scheduled

Its true, the land has been registered! The solicitor received a letter requesting us to attend settlement on November 4. We have to take a day off work and go into the city to sign or pay them a $55 fee if we want to hold it elsewhere.

I did some nagging yesterday and the person who took us this far with the build was surprised to learn that we haven’t been contacted by a customer service officer yet or been to any of our selection appointments. He said he would get it fixed and they would call us straight away.

Trouble now is that the next two weeks at work are hectic and I won’t have time to eat my lunch let alone have a day off to attend a colour appointment. So I guess realistically nothing will be done before November starts. Then, it would be a MIRACLE if it was through the design review panel and council approval before Christmas. A February start looks less and less likely.

Building contract signed

Hooray! On Monday we signed the building contract. This is fantastic news because:

1. we will be able to settle on the land, when it becomes registered, without paying large sums of daily interest.

2. we can stop worrying about having things included in the tender (too late for that now!)

3. we can move on and look forward to our commencement date.

We will be assigned a new Wisdom person to be our Customer Service Officer (CSO) and that person will take us through all out colour appointments, final DRP approval, council approval and then finally we can have a house built. We have been issued a commencement date of the 28 February 2014 but we’re hoping it will get started a little sooner.

For now though, we’re back to waiting.

How very gen Y of us

The exchange of contracts (at least our end of it) went without a hitch yesterday. Now, both the land contract and the bank contract acceptance are in the mail, and my bank account balance has shrunk a bit.

When we booked our appointment over the phone with our solicitor, who is a bit of a fuddy-duddy, he asked us to bring a cheque to send with the contract for our deposit payment. Neither of us actually have a cheque book so that would have meant juggling our online accounts into a normal bank account and then going into to the bank and asking for a cheque and then paying the fee that goes with that. The bank is only open until 4pm and blah blah blah. Too much unnecessary effort. So we said, “We’ll just make a direct debit to the vendor’s account.” It would take 2 minutes and I can do it on my phone. No fees and no trips to the bank.

The solicitor said “That’s very gen Y of you.”

Well, it is 2013.

So a few weeks later we go to the appointment, I make the transfer on my phone and then I write down the payment reference number in our notebook, where we’re keeping notes on all the important stuff.

The solicitor says “Oh, you’re going to write it down- that’s not very gen Y of you.”

Again with the gen Y thing! I’m thinking, what a smart arse. But I say, “Well, that’s a very baby boomer comment.”

Touché.

He shut up about us being gen Y after that.

grandma+phone+cartoon

Exchanging the contracts

Tomorrow afternoon we are booked in to exchange contracts on the land. After receiving the contract at the beginning of May we’ve applied for two extensions and have managed to delay the exchange date by a whole month. A month might not seem like much, it has made a huge difference.

Firstly, we’ve been able to get a tender from our builder. This was an important step because we will now know how much the build will be (and whether we can afford it!) before we’ve paid the non-refundable deposit for the land. The land deposit is at 5% which is a fair chunk of money if you’re not absolutely sure you can get approval from a bank.

We’ve been able to get the land and build loan approved together, like a house and land package deal. This took a bit longer than just getting the land loan first and then the build loan later, but I think it was worth it. We’ve probably saved on some bank fees and we are able to apply for the First Home Owners Grant straight away.

Settlement will take place 60 days after exchange. So, by delaying exchange we’ve delayed settlement.  We must have a build contract signed before settlement on the land. If the build contract delays settlement then there is daily interest to pay and it adds up fast! Getting to a point where you can sign a contract with a builder takes time. So far, its been 6 weeks since we requested a tender and there is probably another 6-8 weeks to go before we can sign the build contract. There is absolutely no way we could have had the build contract ready by settlement if we had not have delayed exchange.

But, we can’t delay any longer. Tomorrow is the day for us to sign and exchange our contracts and then the count down until settlement begins.

 

Tender presentation

I don’t know about you, but when I think of the word “presentation”, I think of a room of people in boring clothes trying to stay attentive to a poorly formatted PowerPoint presentation that has way too many words in it, and not enough pictures.

Hold that thought. Now, replace the PowerPoint screen with a printed document. Got it? Yep,  congratulations! You’re at the tender presentation.

You walk in, sit down on one side of the table with the sales person on the other, and they proceed to read the tender document to you. Ours is 9 pages long and has 69 clauses.

boring-presentation-300x300

If your sales people have been good to you up to this point, there should be nothing in the tender that you don’t already know about. The document sets out what is included in the base price of your house, what is an additional charge or provisional allowance, and what is to be done by the owner of the property (you). It will also include “note only” clauses which are clauses the builder has put in to cover themselves for any unforeseen changes. An example of this is that the tender is subject to developer approval- if the council wants you to change something then you will pay for it, not the builder.

Most importantly, it should provide you with the initial estimate of the build price. As it is not the final estimate, you can probably expect it to go up before your construction starts.

Since the sales person is so kindly reading out all the clauses to you, you may as well ask questions if you have any.

Things to make sure you’re aware of:

  • who (either you or the builder) is responsible for what? For example, if there are trees to be removed who will be doing it? Who will pay the water and electricity bills during construction?
  • who will pay the council fees or bonds? Usually, the builder will pay “standard” fees for development approvals but the owner will pay any other fees.
  • is the tender inclusive of GST?
  • does the builder allow you to bring in your own tradespeople to do work during the build? (Probably not but you should be aware before you try it!)
  • does the builder allow you to visit site for inspections? If so, how often?
  • if you’re asked to pay a deposit for the next stage of the process then make sure its in line with what they are legally allowed to ask for. Check out NSW Fair Trading for information on that.
  • are all the “standard inclusions” in there? This may include any promotional packages or upgrades you have accepted.

Our tender was pretty straight forward. The builder has not had access to the site, so we know the tender could change once all the soil testing and surveying is done. The builder should be upfront about anything that may change the price.

For those interested in timing- our tender was presented 19 working days after we requested it, which is within the 4 weeks we were told to expect by the sales people.

The loophole

So, if you do happen to be in the situation where you have:

a)  your land contract in your hands, and

b)  you, like us, just realised you have been fooled because you didn’t realise you needed a build contract signed too,

there is one loophole you might want to try before you give up and resort to consoling yourself with a litre of ice-cream.

Try for an extension on your exchange of contracts date.

You need to do this before you’ve exchanged contracts. To do this you will need to get your conveyancer/solicitor to write to the developer (using the contact details on the front page of your contract) asking for an extension on the exchange. You will need to provide reasons for your extension. Some reasons could be (obviously, they won’t apply to everyone):

  • you’ve been unable to get a tender within the four weeks allocated and therefore do not have accurate information to provide to the bank for financing (it’s pretty common for a builder to take longer than four weeks to provide a tender). This is an especially good reason if you have selected one of the four preferred builders at Bunya and they haven’t been able to come through with the tender on time.
  •  if you have a corner block there are no design panel pre-approved designs from any of the preferred four builders. This may mean you can’t get a tender for your build on time.
  • if your land is unregistered you probably don’t have access to the block of land yet for any kind of independent assessments that may affect your final build price (this may include access for the builder to assess site contours, access for an independent bushfire report, access for independent soil testing… the list goes on!).

If I were you, I would ask for slightly more time than you need as you probably won’t get the amount of time you request. Be reasonable.

The benefit of gaining an extension for us has meant that we will be able to get a tender for the build price, therefore knowing if we can afford to pay for it all, before we’ve put down the 5% deposit on the land at exchange. 5% = a lot of money for us. It also means that settlement, in turn, will be delayed as the 60 days only starts from exchanging contracts. This means that we might just scrape in (if everything goes to plan) on having our build contract signed before settlement and we won’t need to pay interest to the developer for delaying settlement. Again, interest = a lot of money.

A caution: don’t get muddled up here and try to extend your settlement date after you’ve exchanged contracts because I doubt very much the developer will even consider it. You need to extend the exchange, not the settlement.

Hope that helps someone!

If you have any other good reasons for an extension and you’d like to share them please leave a reply.

Loopholes

How to buy at Bunya

Bunya is the name given to a new estate under construction in Western Sydney. Its located in the suburb of Bungarribee and the semi circle shaped development spans out off Doonside road. 

A nice little website, Bunya Living, has been put together by the developer. It includes some information about the land available, a map of the master plan and the all important information about how to buy at Bunya.

We read all the information keenly, but figured the lovely how to buy at Bunya guide was just that, a guide. We had planned to purchase a block of land and then pay some of it off while we thought about what kind of house we would like to build on it.

So, we lined up with everyone else to put down our reservation fee on a block and then we waited for the contract to arrive before we made any further decisions. The land is unregistered so we figured we had plenty of time.

But, when the contract did arrive we were shocked to see that to settle on the block of land you must prove to the developers that you have a contract to build on the land already signed.

Now, lets assume you receive your contract on day 1. The contracts must be exchanged no more than 30 days later and you need to pay a 5% deposit on the land. The count down to settlement (and the final payment) then starts and you get 60 days for that. So, a total of 90 days. Most builders take around the same amount of time, if not longer, to get to a stage where contracts can be signed. So in order have your build contract signed before settlement on the block of land… a miracle will be in order.

So, lesson one is this: the “guide” for how to by at Bunya is not just a guide.

To really ensure you keep the sleepless nights to a minimum you need to be ahead of the guide. If you can, getting a tender for a house plan before you reserve your block would probably be the best way forward. But since you don’t know which block you’ll get or if you’ll even get one at all- good luck with that!