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Taking over incomplete building work

Sometimes building jobs can be left incomplete or unfinished. This may be the result of an unresolved dispute with an owner or the builder having gone into administration or liquidation.

Whilst it may appear easy or low-risk to finish a home that is already 80 or 90% complete, there are a number of risks that you should be aware of, and some protective measures which you should take, before committing yourself to this type of project. 

Risk - You become responsible!

A key risk in taking over another builder’s work is that you may be considered by the owner (and subsequent owners of the property) to have accepted responsibility for the entire job, including works undertaken by the former builder. You might therefore find yourself liable for rectifying any defective works performed by the former builder.  

This includes that the base works completed by the former builder may be defective and/or not to industry standards. This, in turn, may impair the quality of your work and require rectification work to be undertaken at your own cost. A common example is where you are contracted to carry out painting work on walls built by a former builder and the walls are defective, which leads to subsequent painting defects in your work.  

How can I protect myself? 

There are several proactive steps you can take to protect yourself when taking over incomplete building work:  

  • Preliminaries – ensure that the original contract is at an end and that the client is responsible for any legal or financial claims made by the former builder. Ask for something in writing to support this and insert it into the contract
  • Copyright - If you are intending to build off another builders plans, then it is wise to ensure that the original builder has agreed to use of their plans by you to finish the job;
  • Inspect for defects – before signing a new contract or providing a quote, arrange a time with the client to document, examine, inspect and test the works. Also, where possible take photos of the existing works to attach to the newly signed building contract
  • Scope of works – your scope of works for taking over the job should explicitly identify the works performed by the former builder, the works performed by you as the incoming builder, and any rectification works to be carried out by you of incomplete or defective works performed by the former builder
  • You should also request that the potential client commission an independent building inspection of the works completed by the former builder, checking all the works and making an enquiry of works that are invisible such as waterproofing, damp proofing and termite barriers (this may include the production of any certificates/council inspections if these works have already been done)
  • Acceptance of base works – include a term in your contract which states that the client has accepted the base work as being satisfactory
  • Exclusion of Liability - include a form of indemnity in your contract with a clause or special condition which states that you do not accept responsibility for the former builder’s works and that any rectification work which needs to be completed in respect of their works will be dealt with by way of a variation to the contract and with any additional costs to be charged to the client accordingly; and
  • Insurance and building permit - you will need to take out warranty insurance or confirm the validity of any existing insurance. In addition, notify the local government authority that the building work has been reassigned and apply for the permit to be transferred into your name, or apply for a new permit

It would also be prudent to factor into your profit margin the financial risks associated with this type of project.  

Furthermore, to assist you in deciding whether to take on the project, you should also make inquiries with the client as to why the former builder is no longer working on the project. This will assist you in making commercial decision as to whether or not to take on the unfinished work for the client.

To find out more, contact HIA's Workplace Services team

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