Completion Date and Penalties

The buyer’s claim

The buyer claimed the builder did not provide sufficient notice of the completion date to enable them to obtain a mortgage for the purchase and that they were forced to pay service charges and council tax when the property had not completed.

Furthermore, once the issue was raised, the builder provided poor customer service which led to inconvenience and distress.

The buyer requested the builder refund the £15,000 extra penalty interest, service charge and council tax.

The builder’s defence

The builder stated that the completion date had been calculated in accordance with the mechanism set out in the contract which the builder had complied with and which the buyer had signed. The buyer’s failure to complete on the completion date set by the Notice to Complete constituted a breach of the contract and entitled the builder to charge interest, council tax and service charges from the date of contractual completion to the date of actual completion.

The adjudicator’s findings

The adjudicator noted that the completion date was governed by the contract and that the buyer was informed the builder would be issuing a “Completion Notice”.  However the buyer could not complete on the date specified due to mortgage and finance issues. The adjudicator was satisfied that the builder provided reliable and realistic information about completion of construction, the date of Legal Completion and the date for the handover of the property, which was in line with the contract and had been agreed between the parties.

The adjudicator found that the builder was entitled to charge interest, service charges, and council tax as this was explicitly set out in the contract and accordingly, was satisfied that the builder had complied with the Code.

The adjudicator was also satisfied that the builder responded to the buyer’s enquiries and made goodwill gestures such as reducing interest where the builder found valid issues. The builder was in dialogue with the buyer throughout the dispute and had a system and procedures for receiving, handling, and resolving buyers’ service calls and complaints.

Learning points

For buyers:

• It is your responsibility to make sure you have the appropriate financial and legal documentation in place ahead of planned completion. Although completion dates can be delayed, it is better to be prepared in advance as it is often easier to extend an existing mortgage offer than to arrange one at short notice.
• Read your contract thoroughly and be aware of any obligations it places on you. If you are unhappy or unsure, discuss this with your solicitor or licensed conveyancer who may be able to negotiate some aspects on your behalf.
• Keep in regular contact with your builder and keep your finance and legal advisors up to date to minimise the risk of last minute problems.

For builders:

• Provide regular updates about legal completion dates, particularly as a property nears completion. It’s helpful to reiterate any obligations or penalties that may be applied so your buyers are fully informed and understand their position.
• If you suspect a customer may be vulnerable due to their circumstances, it is particularly important to help them understand their obligations and signpost them to where they can seek additional guidance if they need it.
• Whatever the circumstances, keep in regular contact with your buyers to avoid surprises, provide support where you can and react quickly to any requests for information which may otherwise delay the completion process.