Collier Homes is the latest in a spate of home builder insolvencies.
Once again, home buyers will be left to claim up to $100,000 from the home indemnity insurer for not getting the home that they bargained for. The liquidator will have to source another builder to take on the risk of an incomplete project, and some sub contractors may not recover monies owed and will stop work part way through the job.
Whilst this may give home buyers some financial comfort, it still leaves:
- home buyers without the homes they wanted delivered on time and sometimes on budget;
- subcontractors without work and often out of pocket;
- the rest of the home building industry carrying a 116% rise in home indemnity insurance premiums over the last four years; and
- the public at large with the social and economic cost of a delayed or incomplete built environment.
HHG Legal Group has suggested law reform in this area for some time: see [ Time for Reform in the Building Industry & HHG Construction Law Series Part 11: Solving WA's Subcontractor Payment and Home Indemnity Issues]. It is to be hoped that this latest insolvency will have the effect of triggering discussions about how the interests of homebuyers and subcontractors may be better served by law reform.
We have also been advising parties in connection with ways to amend contracts to address this issue. If you, as a home buyer or subcontractor, are unsure about where you stand or wish to better protect yourself from the risk of builder insolvency, you should seek legal advice on your specific circumstances.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
