We Need Deposits protected!
In the month of August 2022 we have had two building contractors go into liquidation and as a result the deposits given to the building companies are in serious doubt as being recoverable. On 20th August a highrise apartment block contractor went into liquidation placing doubt as to the recoverablity of the deposits that many have placed down on the purchase of the appartments “off the plan”. This is not acceptable in so many ways.
As well Oracle Building Corporation has also gone into liquidation and many home owners have homes partly built and so now the scramble to see what is the path ahead for these people and how will their “dream” home be completed after this development.
For many years I have been calling on changes to the way these things happen so that the customer is not taken for a ride by the hype of sales staff of a company that is unable to deliver their promises without relying on the funds from the potential buyers of the completed product.
A reasonable solution:
It seems to me that the deposits and upfront payments must be paid in to a trust account and that the account is unable to be touched by the building contractor. As designated progress is made then it is reasonable that a % of the funds be forwarded to the contractors account by a third party. I would not want the full payment for each stage to forwarded upon the completing of that stage, incase there is any faults that may need rectification.
This will make it tight for contractors to maintain cash flows; however the alternatives are crushing the lives of ordinary Australians. Very often there are sub-contractors as well used by thes buildng contractors and when there is a collapse these trades people also remain unpaid and so the third party holding the deposits and/or forward payments ought to be able to release part payments to the sub-contractors as they complete their set work.
All this will mean that there will need to be a re-set of the building industry where by the building contractors will need to establish themselves on a more solid finsncial foundation, and that ought to be applauded by all in the industy. I can imagine high resistance to these proposals; yet those being stung by the colapses would most certainly be pleased if there was a degree of certainity that what they believed they were purchasing is actually realised, as it ought to be.