Hi
all,
I found your "step by step on how to build",
albeit too late for me, very comprehensive and very
informative.
My wife and I have just completed a building project
(our second) and we thought that, once done, second
time a breeze. Forget it!
Our builder up and left and I had to take leave and
jump in to complete the project myself.
Fortunately the periodic payments were deposited into
our account and the builder would then request his portion
from us. This enabled us to keep a check on the finances.
I suggest that this be a good practice that the draws
from the bank be managed by the owner and not paid directly
to the builder. We suspect the builder thought that
the money would roll on for ever and a day but I kept
a spreadsheet of items for his account and PC items
for my account as well as on payments made to him which
were reconciled back to his account. Unfortunately his
financial planning was not up to par and he could not
complete the project in terms of the contract. The case
is now in the hands of my attorneys.
Just one further thing we learned about the bank set
up. Banks have building loans for new buildings and
bonds for existing houses and they operate differently.
During the building process the building loan is in
operation but once the building is completed the loan
is converted to a bond. We were paid a certain periodic
payment and paid the builder his portion and kept the
rest for PC items which were not needed right then.
My wife, quite rightly, thought that she could put this
amount back into the building loan account, thus reducing
the interest, and get it later when we needed it, as
we had arranged at the bank for accessbond facilities.
BIG MISTAKE. The building loan will only pay out after
an assessment by an assessor and will NOT release any
money paid back into the account. Only once it is converted
to a bond does the accessbond facility kick in where
all advance payments, over and above the installment,
can be accessed. SO BE WARNED!
Can you imagine our consternation when we needed the
funds and couldn't get it! And the bank wouldn't budge!
After much haggling with the powers that be at the bank
an assessor was sent out and we could finally receive
funds, which had been previously released and available
to us, to carry on with the project.
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