Recently, due to rising construction costs and other reasons, some large and medium to small-sized builders have collapsed. If you have signed a construction contract but the builder goes bankrupt before the property is completed, you should consider the following (Note: Each case is different, and this is a general discussion. Please seek independent legal advice based on your situation).
- In Queensland, the QBCC (Queensland Building and Construction Commission) is the authority that regulates housing construction. You may be able to make a claim under the Queensland Home Warranty Scheme, which includes protection if the builder collapses and cannot complete the work.
- Check the builder’s Home Warranty Insurance/Home Indemnity Insurance Policy rights. In most cases, the QBCC requires builders to purchase this insurance.
- In practice, you should clarify the following issues with a lawyer:
- Do you need to pay any outstanding invoices from the builder?
- Can you request a refund of any progress payments already made?
- Can you file a claim with the liquidator?
- Whether and how to hire a new builder to complete the construction.
- Whether and how to hire subcontractors to finish their work.
- How to protect yourself from any claims the liquidator may make against you for payment.
