I have recently had the experience of dealing with Simonds Homes on behalf of a client who was considering building with them. The purpose of this blog post is to make consumers aware of potential difficulties in negotiating the terms of a domestic building contract with Simonds. Basically, Simonds refused to even consider negotiating the legal terms of the building contract after my client had paid the initial deposit to cover the cost of preparing the building contract. I consider this to be unethical and unfair. Potential customers need to be aware of this before handing over their hard earned money as an “initial deposit”.

My client paid Simonds a “contract preparation fee” and was given an appointment time to sign the contract.

First, Simonds refused to provide a copy of the completed contract for lawyer review before the client meeting. They stated that it is their company policy not to provide the actual completed contract and would only send a template. When I pointed out that my client had in good faith paid them a fee to prepare the contract and as such was entitled to receive a copy of it they responded by saying that they were not withholding the contract but would still not send me a copy of it to review prior to the meeting.

I advised my client not to sign the contract on the day and to bring it to me for review, which my client did.

It took me no more than 30 minutes to identify a number of issues with the proposed contract which I considered to be unfair to my client or which potentially exposed my client to escalating costs or additional charges. There were also at least two issues which I considered to be in conflict with the Domestic Buildings Contract Act 1995 (Vic).

My client took the contract back to Simonds together with my proposed reasonable amendments hoping to go through the issues point by point, to clarify his concerns and have a reasonable discussion to see if a contract acceptable to both parties could be entered into. Apparently not.

The response from the Simonds Consultant was immediate: ”Simonds Do Not Negotiate Building Contracts – Take It or Leave It”. My client decided to leave it. The issues of the deposit already paid will no doubt be resolved next year, at the Victorian Civil and Administrative Tribunal (VCAT) if needed.

Consumer Tips on Preparing to Sign a Domestic Building Contract:

1. Research the reputation of the builder before you hand over any money or sign anything. Have a number of options ready.
2. Get legal advice before you sign a domestic building contract or anything preliminary to such a contract.
3. Negotiating the terms of a contract to ensure that it is fair to both parties is a normal and accepted commercial practice. Beware of dealing with a party who will not even consider your point of view. While you may not negotiate the terms of a $50-a-month mobile phone contract, you should certainly negotiate the terms of a building contract that is worth hundreds of thousands of dollars of your hard-earned money.
4. Domestic building contracts can be fair to both parties but the builder usually has a huge information and knowledge advantage over the owner. There can be a real inequality in bargaining power. The builder is concerned only with his own best interests, the owner needs to ensure that the owner’s interests are likewise looked after.

The VCAT has a Domestic Building List that has the power to:

• order the payment of money, including money owing, damages or restitution;
• vary a term of a domestic building contract;
• declare that a term of a domestic building contract is or is not void;
• declare void any unjust term of a contract or varying a contract to avoid injustice;
• order the refund of money paid under a domestic building contract;
• order rectification or completion of defective or incomplete work.

If you have any questions in relation to domestic building contracts, problems with builders or questions about the VCAT Domestic Building List, contact Bart Janowski at Goshawk Law on 1300 918 788.

Tags: Domestic Building Contract, Simonds Homes, VCAT

This entry was posted on Wednesday, December 23rd, 2009 at 3:34 pm and is filed under Building & Construction, Consumer & Trade Practices. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.