Building & Construction

First home buyers gets the better of builder involved in house and land package promotion. Misrepresentations and hand amendment to building contract lead to substantial cost saving.

The Background

The clients were looking at new house and land packages with the view to purchase for their own residence. They met with a selling agent for a project home builder who showed them a site within a new subdivision and provided a promotional brochure showing a split level home that they were told could be built on the site for a cost of $230,000.00. The vacant land was for sale by the project home builder for $160,000.00.

The project home builder represented to our clients that the house would be level with the land at the back of the house, and that it would be constructed on a full concrete slab. Relying on these representations, the clients sough assistance from a Conveyancer and entered into an unconditional Contract to buy the vacant land for $160,000.00.

The project home builder prepared a building contract for the construction of a split level concrete slab home on the property which was signed by the clients. Whilst the clients had entered into a contract to buy the vacant land on which the house was to be built, at the time the did not yet own the land.

The project home builder assured the clients that the building contract price of $230,000.00 was fixed and would only increase if extras were requested. Wisely, the clients included a hand written special condition affirming the representation that that the building price was fixed.

During the meeting, the clients noticed that the plan included in the building contract differed slightly to the design which they had been promised initially. The plan attached to the building contract showed a single level home built not over a concrete slab but over timber bearers and joists supported by posts. The project home builder then assured the clients that the plans attached to the building contract would be amended to show the originally promised split level slab home. In reliance upon these representations the clients then signed the building contract.

About a week later the clients received an email from the project home builder indicating that it would be more cost effective for them to build on the block using bearers and joists. The clients made clear their objection to this, insisting that the agreed price was for a home built over a split level concrete slab and that that was they required to be constructed.

Approximately three (3) months later the project builder began indicating that the price for the building works would increase by over $40,000.00 because of difficulties that would be encountered constructing the concrete slab home due to the slope of the land. Shortly after the project home builder emailed the client suggesting that a proposed alternative design of a home built over timber bearers and joists supported by posts would work better on a sloping block.
The proposed alternative design was again rejected by the clients who insisted that a split level home on a concrete slab be constructed for the agreed fixed price in accordance with the contract.

By this time the clients had completed the purchase of the vacant land on which the house was to be built.

How We Helped

The clients came to Roberts Crosbie Mortensen for assistance shortly after they had completed their purchase of the land as they had not had any further contact from the builder and were unaware of whether Council approval had been sought to construct the building or what plan approval would be sought for.

The clients made enquiries with a number of other builders, and determined that the likely cost of constructing an equivalent split level concrete slab home on the land would be between $320,000 and $370,000 ($90,000 to $140,000 more than the fixed price that had agreed with the builder).

Roberts Crosbie Mortensen considered the building contract and the representations that had been made by and on behalf of the builder carefully then sent a detailed letter to the project home builder alleging misleading and deceptive conduct and breaches of contract. The letter demanded that the builder construct the split level slab home for $230,000 as promised failing which the clients would terminate the contract and sue for damages ($90,000 to $140,000).

The builder sought legal advice and after a brief exchange of correspondence Roberts Legal drew their Solicitors’ attention to a number of case authorities supporting the clients position.

The Outcome

The builder subsequently agreed to construct the split level concrete slab home on the land for $230,000.00, this outcome resulting in the clients saving $90,000 to $140,000 on additional building costs and/or becoming involved in expensive litigation.

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