The final few stages of a building or large renovation project may feel like they drag on a bit – largely because you’re so close to the end, and also because of the inspection / rectification process.
It’s important that you don’t get impatient though – the final handover’s your last chance to address any work that’s not up to scratch, or anything you think hasn’t been delivered according to what’s been agreed upon in your contract.
What is a ‘final handover’?
The final handover is the very last stage of any home build or big renovation project. It’s the point at which:
- you officially take ownership of the house, and
- you make your final payment to the builder
The builder will normally contact you a week before the handover date to arrange access for a pre-handover inspection (also known as a ‘final inspection’). By the time you’re ready for the final handover stage, you should’ve:
- had a building surveyor in to do a practical completion inspection and issue a certificate of occupancy
- done a thorough pre-handover inspection (or better - hired an independent building consultant or inspector to do this for you)
- had work done to rectify any faults or issues that were picked up in your final inspection, as agreed in your notice of completion.
On handover day you’ll receive:
- your occupancy permit or the equivalent certificate from a building surveyor,
- warranty and instruction documentation for appliances and fixtures, and
- any other documentation from service providers (e.g. for supply of electricity, water, sewerage, gas etc.)
Final payments before work is finished
The most important aspect of the final handover for the builder is your final payment. This usually amounts to about 10% of the overall cost of the contract – and in practical terms, probably represents a significant amount of the builder’s profit on the project.
To put it bluntly – this is your last bit of leverage. Once you’ve made that final payment, the builder has one less reason to attend to your concerns.
No matter how much you trust your builder (or in some cases, how much pressure they put on you), if there are still things to be fixed, you shouldn’t just make your final payment in good faith. In many cases, your bank or lender won’t release the funds for your final payment until the work is finished anyway.
Some building contracts will contain progress payment clauses and harsh penalties for late payments – and while most builders will be completely happy to work with you and your building inspector /consultant to make sure everything’s done to satisfaction, sometimes this is used to try and force your final payment.
If this is the case with your contract and you’re not satisfied that the defects have been fully addressed, you should seek advice from your independent consultant, your local building authority or a solicitor well before the due date to find out what the right course of action is. A solicitor may not be cheap, but can save you a lot of money in these kinds of situations.
Moving in before final payment
In many cases it’ll make sense for you to move in before the final payment’s made, while you’re waiting for defects to be fixed. This is pretty common and no big deal, but keep in mind that taking possession of the house without written approval before final payment is made can legally be construed as a breach of contract – which in turn can act against you in a number of different ways.
If your builder’s happy with you taking possession before you’ve made your final payment, make sure the details are clear, and ensure that both parties have agreed to this in writing.