A Condition within a Building Agreement

[lbournes]

A friend has the following condition stated within his Building Agreement for an Apartment which he purchased off the plans about 2 1/2 years ago. It still is not complete, the stated Completion Period is 30 months which will shortly expire and this week it has emerged that the Developer has been granted Examinership by the High Court with 100 days protection from his Creditors.

My friend will shortly be visiting his solictor for advise, but in the meantime I have posted this condition below which is in the Building Agreement. We are wondering if the fact that the Developer has now entered a period of Examinership, is something that this following condition covers?

Is the process of Examinership, which we understand is a technical process by which companies which are insolvent can enter to address financial difficulities, can this be seen as reconstruction or amalgamation?
What would be the position of the Buyer if after the 100 days the Developer is appointed a Liquidator, bearing in mind this Condition within his Building Agreement?



Insolvency of Contractor

If the Contractor should be adjudged bankrupt or, being a Company enter into liquidation (other than for purpose of reconstruction or amalgamation) or if a receiver shall be appointed or if the Contractor shall enter into an arrangement with or for the benefit of his creditors or become unable or refuse or neglect to carry out and complete the Works, the Employer may determine this Agreement by notice in writing to the Contractor or his assignee or liquidator or receiver. On the delivery of such notice the Contractor shall be entitled to payment only for work actually done by him or materials bought to and left on the Site in pursuance of this Agreement PROVIDED ALWAYS that if the Employer shall be obliged to expend a greater amount to complete the Works than is payable on foot of this Agreement, he shall be entitled to recover from the Contractor or to deduct from any balance due to the Contractor any reasonable amount so expended by the Employer.

 

[mf1]

I think this whole problem is way bigger than the wording in the Building Agreement.

I personally do not know anything about the partiular situation. However, there has been a lot of debate on this board ( and I think Boards/ Neighbours) about these particular developers. It appears that, within the last 6 months, the company has issued High Court proceedings against a very large number of purchasers who were trying to default on contracts - these must be where works have been (largely) completed. There appear to be a number of other purchasers who have paid their deposit but where works have not been either commenced or completed within the completion period. The whole thing is a mess and there are a lot of people affected by it.

My suggestion is that the purchasers join together in their dealings with the company/ examiner. There will be some reluctance on many peoples part to do this because (a) they will want to do a personal deal which gets them out even if that is at anyone elses expense and (b) there will be the perfectly natural frustration of trying to deal with lots of people some of whom are as mad as hell but refuse to face up to their problems, are entirely unable to articulate or understand their legal situation, and don't particularly want to pay anyone to advise them properly.

It would take a few people in your friends situation to actively find out who is in the same position, meet up and discuss whether a group approach is something they want and how it would be organised and funded.

The alternative is to wait and see the outcome of the examinership process and see is it possible to deal with the Examiner/Company thereafter.

mf

 

[darkylarch]

OP, the condition you quote grants the developer rights against its contractor. Your friend is not a party to that contract (unless there's some sort of collateral warranty in place, which I'd doubt) so it grants him no rights.

 

[JoeB]

I think that clause looks very strong in your favour.. your friend can even claim back for extra expenses because he has to change builder mid way... but I don't know how it works in practice.

 

[mf1]

Lads, yisser completely missing the point!

This is a standard Building Agreement in a standard housing development between a standard purchaser and a standard builder BUT Builder is in difficulties. It is a nightmarish situation where there is little or no chance of recovering anything let alone additional expenses!

The hope should be that someone ( be it the builder or someone on his behalf) can complete the works OR that the purchasers are released from the contract/building agreement although whether there would be funds available to repay deposits could be an issue.

There are a lot of sides to the problem.

mf

 

[lbournes]

Hi guys - firstly thanks for taking time to reply, just to clarify that yes its a standard building agreement between a purchaser (first time buyer) and a builder, who is now in financial difficulty.

This condition appears in the building agreement, and because of recent events we are wondering / looking for an explanation as to how this will affect us.