Member Login

Sometimes people sign a building contract and pay a deposit on a home when land title is not yet available. Delays in the processing of land title can be lengthy and with building costs increasing rapidly, so there can be contract complications and inconvenience to both parties.

Under normal conditions and under most building contracts the owner has the responsibility to produce evidence of land title prior to the commencement of works. Where this evidence is not provided the builder can terminate the contract and seek payment/compensation for work performed or costs incurred. This can include overhead expenses and perhaps even loss of profit. Whether this loss of profit extends to profits foregone only on work done, or on the whole job is debatable because in a buoyant market potential damage to the builder from losing this work would be small.

However, if your contract is in fact conditional upon the availability of land title release, the building contract does not always come into operation until title becomes available. When title emerges, the parties are usually contractually bound but the builder may be within his rights to ask for additional costs which have arisen since the original contract was signed.

If title has not yet become available and you wish to extract yourself from this arrangement, there could be a variety of consequences and you should seek legal advice, as it all depends on what is written in the contract.

As you can see this is a very murky area which emphasises the importance of consumers understanding the implication of signing building contracts without title at a time of rising building costs.

Comments are closed.