How to check the Financial Stability of Your Builder
Checking that your builder has the financial backing to last through your build is one of the most important things you can do to safeguard your project.
Choosing a financially sound builder not only minimises the risk of project delays or abandonment but also gives you peace of mind throughout the building process.
Here’s how to check that your builder has a good credit history and the funds to support your new home build.
Here are my top 3 tips give you confidence that your new home builder is financially secure:
1. Online Financial Checks:
Most builders work off a credit cashflow arrangement to have the funds to order materials and pay for labour before you pay their progress claim at completion of each milestone. For this to work on your build, your builder needs to have a secure credit history.
You start by asking your builder for a report from their credit agency. If they aren’t willing to share this, there are a few paid online platforms dedicated to verifying the credit history of builders. CreditWatch is a good example. These websites offer comprehensive reports on a builder’s financial health, including credit ratings, financial statements, and business history.
2. Verify Builder's Licence:
Verifying that your builder complies with your States registration business requirements is crucial to ensure their aren’t unresolved issues on previous builds that may jeopardise the company. For those building in Victoria, the Victorian Building Authority (VBA) offers a convenient online tool to verify the credentials of registered builders.
3. Request Insurance Certificates:
Each contract specifies that types of insurance your Builder must have in place before any deposit is paid or building works start. I always encourage my home building clients to take a proactive approach to Building Insurance by asking their builder for the Certificates of Insurance as a priority after signing the contract. During our Building Contract Health Check, I work with clients to ensure the 3 essential insurance policies are in place before works begin to make sure their build is protected through the entire building journey.
How to reduce risk during your Home Build
The smartest step you can take to reduce the risk of variations, delays and abandonment on your home build is to proactively review your contract to make sure you’ve got the right protections in place throughout your build!
Thanks for reading and catch you on my next post :)
Annelyse
Construction Management | M. Construction Law
