Melbourne builder Avra Group collapses into liquidation, customer’s $900k home in limbo

A Melbourne family are celebrating the news that their builder has gone bust, finally giving them hope of finally finishing their partially built $900,000 home.

A Melbourne family are celebrating the news their builder has gone bust, finally giving them hope of finishing their partially-built home.

Last Friday, Melbourne-based bespoke building company Avra Group (Aust) Pty Ltd collapsed into liquidation.

It’s a relief for David Favretto, 45, and his family, who have been in limbo all year as they waited for Avra Group to uphold their end of the building contract.

“The red flags started to pile up,” the dad-of-three told news.com.au.

The homeowner is hoping his family will be eligible for an insurance payout, which is automatically triggered when a building company appoints liquidators.

But the situation is made more complicated by the fact he terminated the contract prior to Avra Group’s collapse.

He says it’s a bit of a “grey area” about whether his family is entitled to any compensation.

A house with the Avra Group sign.

David Favretto’s partially built home has to be knocked down and started again as it has been exposed to the elements for months.

Mr Favretto signed a $900,000 building contract with Avra Group mid-2022 and for the first three months, everything went to plan.

But then there were lengthy delays. When the building firm finally did install a subfloor, it was just hours before a large downpour of rain, and it wasn’t covered.

When Mr Favretto inquired with the building company, a representative informed him “it would dry out”.

“Then it started being the frame will be done in two weeks, that went for about six months,” he recalled.

From then, he watched on as “half-done random things” were completed on his supposed dream house.

“It got ridiculous, they were building parts of the house that weren’t supposed to be built yet,” he claimed.

For instance, the laundry part of the house got a frame, but nothing else did.

Finally, Mr Favretto claims an apologetic carpenter approached him and said his team was abandoning the site, as Avra Group owed him more than $100,000, and had not paid up.

It was at this point the Favretto family resolved to end the contract.

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Insurance companies were unwilling to insure the rebuild.

Speaking to a lawyer, they learned they couldn’t cut ties until they paid Avra Group’s recent invoice of $12,000 as it would put them in breach of contract otherwise.

“The thing that really sucks is that they legally owe us the $40,000 deposit back but we couldn’t claim it until the contract is terminated,” Mr Favretto said.

“And we couldn’t terminate the contract until we pay $12,000.”

Mr Favretto claims he had no success recouping the $40,000 after severing the contract in April.

He then engaged new builders to complete the job but here hit another roadblock.

The cost of the build had snowballed to $300,000 more, including $50,000 to remove the defective frame from the site and start from scratch.

And when the new builders tried to get insurance cover for the work, insurance companies refused.

“Insurers do not accept takeover projects where there are major defects,” the builders told him in a devastating email.

“Given the condition of this project and that it has been exposed to the elements for 12 months, I do not think it will be possible for us to get insurance for this project.”

Throughout the process, Mr Favretto says his family have been living in a “horrid rental” while they wait for their home to be built.

“We’re renting nearby at extortionate rates having forfeited the luxury of a dishwasher, have three possums in the roof and walls, mushrooms growing from seven places in the bathroom, worms and slugs coming out of the drain almost daily, you have to switch off the heater if you want to use the toaster … and three boys crammed into a small bedroom.”

News.com.au contacted Philip Newman of PCI Partners, the appointed liquidator, but he did not respond to multiple requests for comment.

Mr Favretto said he was concerned when the subfloor was put up right before heavy rain, but he was assured it would “dry out”.

It comes as the entire building industry is in crisis because of supply chain disruptions, skilled labour shortages, skyrocketing costs of materials and logistics, locked-in price contracts and extreme weather events.

So far this year, more than a dozen builders have collapsed.

Earlier this month, news.com.au revealed that two building companies collapsed just days apart, NSW-based luxury builder Millbrook Homes and Victorian residential construction firm Bentley Homes.

Also in July, Perth-based building company Flexible Homes bit the dust.

Last month, news.com.au also reported that Melbourne construction firm Red Bluff Homes had gone into liquidation amid a dispute with a customer over suddenly cancelling the contract while Western Australian firm, the Slatter Group, also went into liquidation in June.

Australia’s 13th biggest builder, Porter Davis, also collapsed earlier this year, placing 1700 projects and another 779 empty blocks of land in jeopardy across Victoria and Queensland, while more than 1000 unsecured creditors owed a whopping $71 million.

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Originally published as Melbourne builder Avra Group collapses into liquidation, customer’s $900k home in limbo