Coast to Coast Homes customers lose average $5562 in deposits owing to company’s collapse
A third of the customers affected by Coast to Coast Homes’ closure have lost their home deposits averaging $5562 each – because they did not have insurance cover.
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- Coast to Coast Homes goes bust
- Customer tells of her building nightmare
- Director could lose family home
Customers of Coast to Coast Homes have likely lost almost $180,000 in deposits as they were not insured against losses triggered by the firm’s closure.
Liquidator Clifton Hall has told The Advertiser that of the 98 customers impacted by the company’s collapse, 32 had paid deposits but did “not appear” to have insurance cover.
“The majority of these homeowners are clients who had paid the company an initial deposit but no physical works had been commenced,” Clifton Hall supervisor Josh Brown said.
“In these circumstances they are precluded from accessing the homeowners warranty scheme.” He said Coast to Coast Homes director Sean Craven had estimated the affected homeowners — who are listed as unsecured creditors — were out of pocket a collective $178,000, or an average $5562 each. In South Australia a builder can legally take a customers’ deposit without building indemnity insurance in place.
But prior to construction on domestic projects costing more than $12,000, and which require council approval, the builder must obtain insurance cover on behalf of the owner.
Underwritten by the State Government and issued through QBE, the insurance protects current and future owners if building work is finished, faulty or if the licensed builder “dies, disappears or is declared bankrupt”.
A builder who breaks the law is liable to a maximum $20,000 fine.
Mr Brown said that his firm was unable to locate insurance certificates for two houses that should have insurance cover.
“We understand that one home has been completed and the other home is only partially completed. We are attempting to locate insurance documentation relating to these properties to assist the homeowners,” he said.
“We are not aware if QBE has subsequently been able to locate these policies.”
A former Coast to Coast Homes employee, who spoke on the condition of anonymity, said she knew of one homeowner whose new house was not insured.
A spokesman for QBE said he was unable to answer if homeowners were without insurance cover and referred the paper to state Treasurer Rob Lucas’ media adviser Belinda Heggen.
Treasurer Rob Lucas said 16 people had lodged formal insurance claims.
“Our understanding is a number of companies have put their hands up to finish the (homes) that were partly completed,” he said.
Coast to Coast Homes, which had offices in Moonta, Adelaide and Port Lincoln, was placed in liquidation on May 24.
The Advertiser revealed yesterday that two companies, owed collectively $131,500, had placed caveats on Mr Craven’s Port Hughes house.
Mr Craven reported the failed company owed $53,128.25 to staff including $4500 in wages, $31,628.25 in holiday pay and 17,000 in superannuation.