Can you please share your experience if you were asked to pay upfront or not

Hi Peter Quinn from Quinn Homes in Christchurch. In this day and age many homeowners have lost significant funds due to builders taking large deposits when these fund are not required by the builder and who generally pays most costs 20th of the month following purchase and then for the company you go bankrupt.. Some cost like permits and resource consents do require to be paid once processed by council so the request for a deposit at signing of the contract is appropriate. If the builder has organised the draughting of plans, soil tests etc he will have costs to pay. We protect our clients by asking for a 5% deposit when the contracts are signed and no more payments until the subsequent stage of construction has been completed. I should point out that in our case there is nothing to protect our clients from, however it gives peace of mind. if you take a look at our website you will see it is the first thing we highlight so you should do sifnificant due diligence or re negotiate the payment terms

Hi Yasmeen,much depends on your pain threshold for risk. There has to be some “good faith” between the parties,can you afford to lose 10% of the build price? What ability do you have to get your money back if they went under. The initial costs are fairly minimal in the overall scheme of things 5% would be max, you must not pay any money before the milestones,the fact that they are wanting this would put up warning flags,in my experience once you pay them before they do the work you end up waiting longer. Use the rule banks do,on completion of the work milestones and to your satisfaction they get paid. With builders being in short supply at present they can dictate the terms pretty much,but as you may have read on this site in recent days there is reason to be cautious. The safest way is to put your money in an escrow account where someone else pays them on your instructions that the work has been done satisfactorily,which means they can’t use your money to fund other debts. The down side is they probably won’t agree to it. Make sure you have a guaranteed start date and reasonable finish date,with penalties if they can’t complete in time. Your time would be well spent checking out the builders previous work and if possible talk to the owners to see if they were satisfied. Good luck.

10% on signing is more than i would expect a builder to ask for. On the builds we have completed (3 in the past 7 years) the most we have paid on signing is around 5% of the build price. Is the contract a Master Build contract? If so then they will cover up to 5% of the contract price or $20,000 including GST, whichever is the lesser (or up to $40,000 if you go with the premium guarantee) should the builder go under. However, this is only if the builder actually completed the paperwork and pays Master Build for this service.

This is not normal practice except for “flyby night” operators. I would not agree to this as it gives all controls to the builder and is dangerous as you are open to him just walking if not properly done. Avoid that builder.

Hi Yasmin, You need to be careful when paying the deposit because from the bad experience I had with the certified builder that I engaged took 8% of deposit from me ($60000) when signing of the contract. They refused to refund the money though the work done was only at the concept plan stage when they found out that the house could not be built at the planned site. They forfeited the whole sum and claimed that they have done work to that amount when nothing was done because there was no agreement at the concept plan stage. Now they have gone under voluntary liquidation and I am left with the lost. Don’t trust anyone with your hard earn money. This cheaters should rot in hell .