Dual Occupancy Properties Under Construction & Drawdown Stages

With two-part contracts for dual occupancy properties, there is a land contract and a building contract.  The building contract will generally be done over stages or draw-downs, with the completion of each stage warranting the next payment.  The stages for each of the draw-downs will generally be as follows:

• Deposit
• Slab
• Frame
• Lock-up / enclosed
• Pre-paint
• Practical Completion

When a bank is providing the finance for the build, a valuer is sent out to the property some or all of the stages to ensure that the build is up to standard before releasing the next payment.

With each new dual occupancy build, we feel it’s important to keep our clients up to date with how the build is going.  Many of our builder partners that we work closely with have different methods of ensuring that each client is kept informed.  This can vary from portal logins to emailed photos.  We also like to have a drive around each of our clients builds ourselves to ensure that everything is on track and there aren’t any unnecessary hold-ups.  With our close relationships with each of the builders that we work with, we also report back anything we feel needs immediate attention.

When properties are under-construction there are also steps that clients can take to ensure that the process is as smooth as possible with no unnecessary hold-ups.  Firstly it’s important to ensure that the banks and financiers have all of the appropriate information required so that they can approve each of the draw-downs and the construction process can stay on track.  In some instances, this may mean ensuring that your broker is on-top of everything and kept up to date with each stage of construction.

I’ve seen a number of incidents where progress payments have been delayed due to a simple lack of communication between the brokers and the financiers.  This can cause a serious delay if it causes the builders to stop work; as each stage of the build process is stepped out and when work stops each trade needs to be re-booked.