If The Builder Goes Bust

House Building can be a high risk business…………..so what happens if the builder of your new house goes bust?


Your house building contract should have clauses included for the eventuality of the builder becoming insolvent. Read the contract carefully but make sure you get in touch with your solicitor.

There should also be a Builder Insurance Policy,  in your name, so check the contract.


If a builder goes into administration it’s still technically trading and may be bought by another builder so the best thing is to keep in contact with the administrators.

If the builder is being liquidated remember the house is on your land and you have paid for a large part of what has been built through the stage payments, so the first thing you need to done is to protect your money and assets. Here are some steps you should think about after you have talked to your legal representative:

  • If you can, put a stop on any stage payments which may be going through.
  • Go to the site and change any locks.(It’s illegal for tradesmen to remove items from a house in lieu of unpaid bills but that doesn’t stop them trying.)
  • If the site has temporary fencing talk to the fencing supplier about paying for the fence to remain.
  • Secure any materials stored on the site.
  • Organise insurance for the house for fire, vandalism and theft.

Once everything is secure you can work with your solicitor to formally terminate the contract and engaging a new builder to finish the work to the original plans.

Have you ever had a builder goes bust building your new home? and did it all turned out OK?


For the next step see Getting Information Together

For more legal posts see Contracts


Builder Bankruptcy – Getting Information Together

Well if you have followed the advice of the previous Bankruptcy Post you should have stopped all payments and made the site secure, to protect the money you have previously paid.

The next step is to get all the information about the build together including:

  • The original contract documents including, The Drawings and, The Specification.
  • Evidence of all payments made.
  • Details of the Builders Insurance. The insurer should be mentioned in the Contract If you haven’t got details of the cover you should contact them and get a copy.
  • Any variations that you have requested.
  • Any increases of cost that the builder has notified you about, (for example Site Work Costs).
  • Copies of all council permits.
  • All other correspondence.
  • A record of how much work has been completed. As well as writing everything down takes lots of photographs.
  • Cost you have incurred,  such as paying fence rental.

Getting all this information together should help you, and your lawyer, in:

  1. Officially ending the old contract.
  2. Dealing with the building insurance (see your contract for details of the insurer) regarding assistance in completing the build.
  3. Organising a contract with a new builder to complete the works.

While you are getting the information you should try to keep in touch with your builders administrator to monitor the situation. If another builder wants to buy your builder’s business that could  be the quickest and easiest way to complete your house.

For more legal posts see Contracts

See this Financial Post for the next step