Burned and spurned by a phoenixing developer

People have recently asked what my problem is with Victoria.  Actually, it’s a number of things, including a serious dearth of transparency, accountability and due process for owners who have been ripped off.

Many Victorians honestly believe their strata system is as good as it gets – presumably those who live in well-run problem-free blocks.

But there are others who are being ripped off in dodgy deals that are reminiscent of NSW 20 years ago. Meanwhile the state government shows little or no interest in fixing the problems that it has allowed to fester and spread.

So, to add a reality check, here’s a letter I received this week from a very angry and bitterly disappointed newlywed who has been cheated by a Melbourne developer who has gone into receivership so they don’t have to pay to fix their defects and already moved on to another project.

The names and details of the property have been removed in line with Flat Chat’s editorial policies.  

I have just read your story about the “horror show”  behind the Otto 2 Case Study. My husband and I have a similar story. We purchased a first home owners 2 bed, 1 bath unit in a small block in Prahran, Melbourne.

Our only bathroom is totally defective and quotes to repair range between $33,000 – $50,000. Something we cannot afford.

Insurance claims have been rejected by our contents insurance and the Owners Corporation insurance as the issue is a construction defect. There is no Builders Warranty Insurance as the building is over three storeys.

The builder is in liquidation (with $5,000 worth of assets) and the developer has phoenixed the entity that was the ‘vendor’ on our contracts. The developer has said he has no legal obligation to
rectify defects.

Note that the developer didn’t pay the builder $1.3m that is owed, the liquidator chased the $1.3m however the developer countersued for $3m, as the builder has no assets there aren’t resources for legal proceedings.

The website promised “liveability”, however we cannot live in the apartment we purchased from this developer, regardless of the entity, builder etc.

The name of the developer is plastered all over all marketing materials, yet the he is just walking away and is already on to his next project while we suffer immensely.

I wrote a Google review explaining our situation and the developer threatened me with a defamation suit unless I removed the review, which I subsequently did.

I want to raise awareness among prospective buyers about the risks associated with purchasing apartments in buildings of four storeys or more, particularly when developers evade responsibility through liquidation or phoenixing.

There needs to be legislation that holds developers accountable for rectifying construction defects and safeguards the interests of homebuyers.

We are newly married and distraught at the fact we are unable to live in our first home due to a lack of a functioning bathroom.

I should point out that this kind of thing wouldn’t be helped by NSW’s Project Intervene which will only step in in there is still an entity around to go back in and fix the problems.

But you can bet if this had happened in Sydney, the Building Commissioner’s inspectors would be all over the new project, shutting it down if need be, leaving this phoenixing crook to crash and burn.