‘Vulnerable’: Collapsed builder slammed
Customers have been left impacted by the collapse of a building company, with further concerns now being aired.
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An Australian lawyer is blowing the lid on “concerning practices” used by a collapsed building company after he represented “vulnerable” construction customers in the past two years.
Melbourne-based building company Varaich Homes, which also traded under the name Harcon Property Group, was placed into administration on September 18.
Its demise has impacted 21 customers’ homes, according to administrators Jirsh Sutherland, while clients had revealed to news.com.au the crushing financial burden as building of their houses has been delayed and others documented disturbing vandalism to their homes.
Now law firm Kapadia and Gordon’s principal solicitor Raynal Kapadia is speaking out about Varaich Homes, outlining a claim of a number of “illegal” moves made by the company and the devastating impact it has had on customers.
Mr Kapadia claimed that Varaich Homes “have a track record and history of failing to appropriately take out or maintain insurance on behalf of building customers”.
“For one of our client’s he entered into a contract in of almost $1 million dollars, and persistently failed to obtain his Domestic Building Insurance ultimately leading to the termination of the contract,” he told news.com.au.
“This was not only in breach of the terms of the contract, but also illegal. (The company) has done this multiple times.”
Do you have a story? Contact sarah.sharples@news.com.au
Mr Kapadia, who specialises in domestic building and construction law, claimed Varaich Homes also had a history of approaching customers and effectively forcing them to pay the company in advance prior to completion of their building stage.
He said the construction company’s story is “often to the effect that it will not be able to progress the work unless it is paid for the stage in advance”.
“This is again conduct which is not permitted by the building contract. There are even occasions where (the company) is yet to complete one stage, and commences the next stage. For example, multiple clients have stated that (Varaich Homes) has commenced roofing works and the lockup stage prior to completion and approval of the frame stage. This is illegal as well,” he claimed.
Tony Varghese is a social worker, who signed up with Varaich Homes in 2022, although construction didn’t kick off until March last year in the Melbourne suburb of Botanic Ridge.
Mr Varghese told news.com.au that he paid $125,000 to Varaich Homes for work prior to it being completed and it was not done.
“I don’t believe I will be able to complete the project now, nor am I certain whether I can recover the money I paid in advance. According to the Victorian Managed Insurance Authority website, the compensation for non-completion is capped at 20 per cent,” he noted.
“Given the current circumstances, this would be insufficient to finish the project. I am now staring at the possibility of being locked into a lifetime of mortgage payments without ever having a finished home. This is a hopeless situation.”
One of the “most concerning aspects” of Varaich Homes is that even after the customers have paid, the works do not progress and trades are not paid, Mr Kapadia claimed.
“This leads to instances where trades become furious with the builder and then in a desperate attempt to pressure Varaich to pay them, they contact homeowners asking for help,” he claimed.
“When all else fails they resort to taking back their work, which in less elegant terms means that they break the work they have done on site. This includes everything from brick laying works, to taking away already installed doors and windows.”
Mr Kapadia questioned whether Varaich Homes is “genuinely insolvent” but added this would be a matter for the administrator to investigate.
A spokeswoman for Jirsch Sutherland said the team has written to creditors and will advise the homeowners on options available.
“As the insurance has now been cancelled by the VMIA (Victorian Managed Insurance Authority), the company is unable to continue with the construction of the homes,” she said. “One of the options available is to sell the contracts as a whole to an alternative builder.”
Administrators are undertaking investigations, reviewing creditor positions and evaluating various projects, she added.
Mr Kapadia said he felt compelled to increase awareness among customers of builders and “share what many unfortunate Varaich customers have gone through”.
“These problems are not unique only to Varaich Homes, there are many bad builders who choose the flout the rules and take advantage of homeowners in a vulnerable position,” he noted.
“Many of these homeowners are trying to build their dream home but instead get left in limbo for months paying a large mortgage for the building project as well as either renting or paying a second mortgage as well.”
Varaich Homes customer Mr Varghese added it was shocking to see customers left in limbo and companies collapsing become a common occurrence in the building industry over the past few years.
“The government cannot remain a bystander in this situation, allowing people’s hard-earned money to be (taken) and leaving them trapped in financial despair through no fault of their own,” he pleaded.
News.com.au contacted Varaich Homes for comment.
sarah.sharples@news.com.au
Originally published as ‘Vulnerable’: Collapsed builder slammed
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