Oracle accused of using ‘loophole’ to slug customers for more money
Troubled Queensland builder Oracle has been accused of using a legal loophole in house and land contracts in an attempt to slug customers tens of thousands of extra dollars.
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Troubled Queensland builder Oracle has been accused of using a legal loophole in fixed-price house and land contracts to slug customers tens of thousands of extra dollars.
According to one lawyer who did not want to be named, Oracle is imposing price increases of up to $52,000 on customers on the basis they did not have possession of the land at the time the builder was due to start work, known in the contract as the Anticipated Start Date (ASD).
That was despite a related company to Oracle owning the land and being responsible for the transfer of the title to the homeowner. Failure to gain possession by the ASD is one of the few reasons fixed price contracts can attract additional costs for home owners.
Oracle is now locked in increasingly bitter disputes with many of the lawyer’s clients over hefty price increases by the company to complete their homes. Oracle is blaming unprecedented increases in building material to justify the price increases despite the fact most customers have fixed-price contracts.
However, disgruntled Oracle customers say they are being given demands of large sums of money with no breakdown of the costs.
The standard HIA home build contract states that a homeowner must give the builder possession of the site before an anticipated start date on a project falls due.
In one case at Pallara, on Brisbane’s southern outskirts, the homeowner did not have possession until a month after the start date. The owner could not obtain the extra money demanded by Oracle because of the breach of the conditions and the deal fell through.
Oracle owned the land through a related entity.
“The builder can either terminate the contract or extend the date of ASD and increase the base price of the home,” says the lawyer. “This is one of the circumstances where the builder can increase the price under a fixed price contract.”
In the house and land contract at Oracle’s Pallara subdivision the ASD date was January 18 but the land was not registered until February 17.
“Therefore it was not possible to comply with the ASD, and the cause of that failure is with (the related entity), the land developer,” the lawyer said.
“So the building company sets the ASD and when the land does not register, which is being done by another company ... the ability to terminate the contract or increase the price arises under the clause for failure to comply with the clause.”
The Pallara subdivision, which has been cut into 20 400-500 sq m allotments, was empty and locked up behind security gating when The Courier-Mail visited on Friday.
According to publicly available real estate data, the land developer purchased the 1.6 hectare property in March 2018 for $2.2m.
Oracle has been contacted for comment.
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