Burned and spurned by a phoenixing developer

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sales swindler showing thumb up with a big smile while assuring and granting you are doing the best bargain in your life

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.

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  • #69193
    Jimmy-T
    Keymaster

      People have recently asked what my problem is with Victoria.  Actually, it’s a number of things, including a serious dearth of transparency, accountab
      [See the full post at: Burned and spurned by a phoenixing developer]

      The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
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    • #69208
      OPERAKAT
      Flatchatter

        Here we go again, I don’t want to sound precious but why use another headline attacking Victoria and ending with “Could this happen in NSW? Yes, probably. Would the developer get away with it? I very much doubt if the new block would avoid the kind of forensic scrutiny that would put them out of business” The scrutiny applied to your “new development” wouldn’t help the poor owners of the original property, by the way, there are another four states and territories you might complain about, good luck with your new book I will look out for it at the Hill of Content.

        #69210
        Jimmy-T
        Keymaster
        Chat-starter

          Here we go again, I don’t want to sound precious but why use another headline attacking Victoria …

          “Victoria” doesn’t appear in either headline.   Not precious but a wee bit parochial. Should I not mention the state in the stories I write?

          … ending with “Could this happen in NSW? Yes, probably. Would the developer get away with it? I very much doubt if the new block would avoid the kind of forensic scrutiny that would put them out of business”

          I think the comparison is valid.  Things are far from perfect in NSW but at least the government is trying to fix things, hence the programs that will catch phoenixers and drive repeat offenders out of business.

          The scrutiny applied to your “new development” wouldn’t help the poor owners of the original property,

          The young woman concerned realised this but wanted to get the story out to warn others.  The developer’s name will be made public eventually, rest assured.

          by the way, there are another four states and territories you might complain about

          And I do, particularly NSW, Queensland and to a lesser extent WA and Tasmania.

          good luck with your new book I will look out for it at the Hill of Content.

          Great bookshop, if it’s anything like the one in Balmain. My partner and I were there just a week or so ago when she was signing copies of her new book “That Bligh Girl”.

          And with regard to me writing about Victoria, someone has to do it or nothing will change.  Mainstream media seems very reluctant to touch apartment stories and the government agencies are collapsing under their own weight.

          I am no Andrews-basher, but the Victorian government seems to have a blind spot when it comes to strata and the media is letting them get away with it.

           

          The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
          #69214
          TonyC
          Flatchatter

            What I would like to know is whether the couple had a professional building inspection report carried out. If, as I suspect, they didn’t then they lost the opportunity to refuse to complete the purchase contract until the defect was rectified. of walking away from the purchase.

            Here I make a second assumption that the law in Victoria is the same as the law in NSW when it comes to building defects. That is, waterproofing (or lack thereof) is a major defect entitling a purchaser to refuse to complete until the defect is rectified.

            The moral of the story is that when purchasing a new apartment, obtain a building inspection report before settlement.

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