Building Trust?

18th Apr 2019

The EDP recently reported on the demise of another building company, who went into liquidation owing more than £100,000. Traditional Renovations went into liquidation leaving customers out of pocket due to unfinished and shoddy workmanship.

It is becoming an all too common problem for builders take payments for construction projects and fail to complete the work.

What can be done to help avoid falling into a similar trap?

• Make sure that you agree in writing with the builder, before the start of the project, the exact works to be completed and at what cost.
• Clarify who you are contracting with – an individual or limited company.
• Agree who is responsible for acquiring the materials, and how they shall be paid for.
• Agree and document a clear timetable for the works to be carried out.
• Agree any extra works or variations in writing.
• Make sure that your agreement is clear regarding payment terms and avoid paying for the full cost of the project “up-front”. Staged payments help control how much you are spending and give you the option of stopping payments if your builder abandons the project part-way through.
• Agree what the parties’ termination rights are, e.g. notice period and circumstances where either party to terminate the agreement.
• Clarify when the final payment for the project becomes due, e.g. is an architect/surveyor to certify the works as being complete?
• It would be prudent to obtain references on your prospective builder, and have credit reference checks carried out.

Contact Peter Hastings at ph@rogers-norton.co.uk

What can be done if you are already a victim, with works uncompleted despite paying the builder?

The Individual Insolvency Register can be searched for free online, it tells you whether a person is subject to a bankruptcy order, debt relief order or individual voluntary arrangement. It will not tell you if an application for any of these has been made. If you find that your builder is already bankrupt you will need to “prove” in the bankruptcy for the amount owing to you. Often a bankrupt will have insufficient assets to cover all of their debts, meaning that you are very unlikely to recover all that you are owed.

If the search comes back clear, you should send a letter before action to your builder, warning them you will issue court proceedings if you are not paid within a set period of time (usually 7 days). If they do not pay then court proceedings can be issued in order to obtain a County Court Judgment, which can then be enforced. The method of enforcement will depend on many circumstances, including the amount owed and the assets of the person who owes you the money.

The experienced Dispute Resolution team at Rogers & Norton has a wealth of experience in dealing with debt recovery matters. We offer a fixed fee service to enable us to review any contracts you may want to sign.

Contact Maria Taylor at mft@rogers-norton.co.uk or Elizabeth Gibson at eg@rogers-norton.co.uk to discuss Debt Recovery or call 01603 675641.