Building Contracts: What You Should Know

The information in this article is courtesy of Realestateweb (Bad Builders: What to do? – 5 December 2008)

According to Luthando Vutula, managing executive of Absa Home Loans, it is absolutely essential that you check all references before you sign a contract with any builder, as banks do not protect clients from unprincipled builders. These builders often rip off their clients by not completing houses or by building poor quality and sub-standard houses.

Vutula advises that clients should ensure that they fully understand the content of the building contract before employing the services of builders. If you, as the client, are not completely satisfied with the standard of quality of the work, you should speak to directly to the builder of developer. If you can’t reach an agreement with the builder you can contact you bank and instruct them to make no further payment on the building until the work has been done to your satisfaction.

Vutula explained that the bank is not party to the building contract and one should contact the National Home Builders Regulatory Council (NHBRC) if you encounter any disputes between you and the builder. Although the bank cannot recommend builders to its clients, the legislation stipulates that all builders involved with building projects that are subject to a mortgage loan should be registered with the NHBRC. You can also get information on registered builders from the NHBRC.

Vutula further advised that clients should obtain legal advice for clarity on the terms and conditions of the contract to avoid any unpleasantness. He added that when a client applies for a loan on building works on their property, the bank appoints a valuer who does checks on the construction or building site to ensure work is being carried out in accordance with the minimum building requirements and plans submitted to the bank.

According to Vutula the clients has the right to withhold payment from the builder but should first familiarise themselves with the contract and where they stand regarding withholding funds.

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