Builders on the Brink – How to Do Your Due Diligence
There is nothing more terrifying and stressful than watching your construction project come to a grinding halt because the construction company went bankrupt halfway through. With the traps of fixed-price contracts, supply chain pressure, and labour shortages, Australia’s construction sector is squeezed.
With many residential builders entering liquidation, the risk of leaving your dream home completely exposed to the elements is never zero. This outcome not only puts your dream home at risk, but it can also lead to years-long legal battles and total financial devastation. So, protecting your life savings is a must, and it means looking beyond the marketing brochures to perform due diligence before you sign a contract.
There’s more to it than thoroughly reviewing the company’s portfolio, though you should do that as well. Fortunately, there are red flags and warning signs that can highlight risk levels and reveal whether the company you want to work with is financially stable.
The Checklist
How does the average person determine whether a business is safe? Here are the critical due diligence checks to follow.
Credit Report
You can directly request a credit report from the builder and CreditorWatch is an independent platform to look for payment defaults or court judgments. Typically, highly solvent builders aren’t shy in readily providing proof of their stable cash flow. You can also consult Builders Check Australia.
Regulatory License History
Use the QBCC portal to look for legal disputes, disciplinary action, license suspensions, as well as the active status, class, and history of their license,
Subcontractor Use
Many people go to great lengths to find the right Reputable New Home Builder, only to learn they subcontract and have a trail of complaints behind them. This is one of the earliest red flags to suggest a contractor is in trouble. Are local suppliers, trades, and subcontractors complaining about delayed (or no) payments? Has there been word about equipment disappearing from active building projects?
Home Warranty Insurance
Always ensure that the statutory home warranty insurance premium is paid immediately after you sign a contract. This is your primary safety net to recover deposits or completion costs if the contractor defaults.
There’s no need to leave things to risk. If you want to build the home of your dreams without the incredible stress, sit down with a Quality New Home Builder you can trust. By partnering with a transparent, stable builder, you protect your investment and ensure a build to the highest standards.
