The first week: what to do before anything else
What you do in the first few days shapes whether your insurance claim is clean or contested, and whether you end up paying twice for the same work. Do these in order.
- Confirm the liquidation on the ASIC register. Search the builder's company name and ACN, not the trading name. The register shows whether a liquidator, administrator or receiver has been appointed and who they are. Rumours on social media and a silent site supervisor are not confirmation. Also check whether the entity on your contract is the one in liquidation; some builders run several companies.
- Do not pay any further progress claims. Not to the builder, not to the site supervisor, not to a director offering to "finish it privately" if you pay them directly. Money paid to a company in liquidation goes into the pool for all creditors and will not buy you work. If a progress claim is sitting in your inbox, leave it unpaid and get advice.
- Secure the site. Change or add locks on temporary fencing and any lock-up areas, and make sure the site is safe for anyone who may enter. If the builder's site fencing is a hired item, the hire company may want it back, so be ready to arrange your own.
- Check your insurance. Find your home warranty insurance certificate (it should have been given to you before work started or before the deposit was paid, depending on your state). Separately, confirm whether the builder's construction works insurance has lapsed and whether you need to arrange your own cover for the unfinished structure against storm, fire, theft and public liability. An uninsured half-built house is a serious exposure.
- Photograph and video the stage of works. Walk the whole site and record everything: each room, roof, services, external works, materials stacked on site, and anything defective or incomplete. Date-stamp it. This is the evidence that proves what stage the builder actually reached, which drives the insurance assessment.
- Do not let anyone remove materials you have paid for. Tradespeople, suppliers and sometimes the builder's own staff may turn up to collect windows, frames, cabinetry or appliances. Ownership of unfixed materials on site can be contested, and the liquidator may assert they belong to the company, so do not get into a physical confrontation. Instead, tell them you do not consent, record who came and what they wanted, and ask the liquidator in writing to confirm the position before anything leaves. Anything already fixed to the building is generally part of your land.
- Gather your paperwork. The signed contract and all variations, every invoice and progress claim, proof of every payment, the insurance certificate, plans and approvals, and all correspondence with the builder.
Important: Home warranty schemes, security of payment laws and contract termination rules differ between states and territories, and the rules change. This page is general information only. Get advice from a construction lawyer on your contract and your state's scheme before you terminate, pay anyone or sign with a new builder.
Home warranty insurance: the cover built for exactly this event
The question most people are really asking is "who pays to finish my house?" The starting answer is home warranty insurance. It goes by different names: the Home Building Compensation Fund (HBCF) in New South Wales, Domestic Building Insurance (DBI) in Victoria, the QBCC Home Warranty Scheme in Queensland, Building Indemnity Insurance in South Australia, and equivalent schemes elsewhere. The builder is required to take it out for residential work above a value threshold, and the certificate is issued in respect of your contract.
It is called "last resort" cover for a reason. It does not respond simply because the builder did bad work or stopped answering the phone. It responds when the builder has died, disappeared or become insolvent, and in some schemes when the builder's licence has been suspended for failing to comply with a tribunal or court order. Liquidation is the clearest trigger there is. If your builder is confirmed in liquidation, this cover is the one that was written for your situation.
What you need to know about the limits
- Overall cap. Each scheme has a maximum amount payable per dwelling or per contract. It is not unlimited and it is not necessarily the full contract value.
- Cap on incomplete work. In some states, the amount payable for non-completion is capped at 20 per cent of the contract price. If your builder reached lock-up and the remaining work costs more than that, the difference is your exposure.
- Defects as well as completion. The cover usually extends to defective work by the insolvent builder, within time limits that differ between structural and non-structural defects.
- Deposit cover. Many schemes cover loss of a deposit where work never started, subject to a limit.
- Excess and exclusions. Check the policy or scheme terms for any excess, and for exclusions such as work outside the contract, owner-supplied items, or amounts you had not actually paid.
Deadlines and thin-cover jurisdictions
Every scheme has a time limit for lodging a claim, usually running from when you became aware of the loss or of the insolvency. The limit can be short. Find out the exact period for your scheme on the day you confirm the liquidation, and lodge well inside it. Lodging a claim that is still being assembled is better than missing the date; you can supply further documents afterwards.
In Western Australia, Tasmania and the territories, the cover is thinner, structured differently, or in some cases absent for the kind of loss you have. Some jurisdictions rely on fidelity funds or indemnity insurance with narrower triggers and lower limits, and some have no mandatory scheme at all for certain contracts. If you are in one of these places, check exactly what certificate was issued for your job, and treat recovery from the liquidation and any personal guarantees in your contract as more important than they would be elsewhere.
Making the claim: what the insurer will want from you
The insurer is paying out of a fund that has to deal with every customer of the failed builder, so it will assess your claim carefully. The claim stands or falls on evidence of three things: what the builder was contracted to do, what you paid, and what stage was actually reached.
| What to provide | Why it matters |
|---|---|
| The signed building contract, plans, specifications and every variation | Establishes the scope the builder was obliged to deliver and the price, which is the base for any percentage cap. |
| Every progress claim and invoice, and proof of every payment (bank statements, receipts) | Shows what you have paid against which stage. Overpayment ahead of the stage reached is a common reason claims are reduced. |
| Photographs, video and a written description of the stage of works | Proves what was completed and what was not at the date of insolvency. This is why the first-week photos matter. |
| A quantity surveyor, building consultant or assessor report | Puts a cost on completing the work and rectifying defects. The insurer will usually send its own assessor as well, but your own report gives you a figure to test theirs against. |
| The home warranty insurance certificate | Confirms the policy or scheme number and that the cover attaches to your contract. |
| ASIC extract and liquidator's appointment documents | Proves the insolvency trigger. |
| Evidence the contract has been terminated (see below) | Many insurers will not finalise a non-completion claim while the original contract is still on foot. |
| Any correspondence with the builder about delays, defects or money | Shows the history and may matter if the insurer questions whether the loss arose before the insolvency. |
Expect the insurer to assess the site itself before it approves anything, and expect it to either pay you an amount towards completion or, in some schemes, manage a tender and engage a completion builder. Which of those applies affects how you plan the next twelve months.
Subcontractors and suppliers turning up with invoices
Within days of a builder failing, the plumber, electrician, frame supplier or bricklayer may contact you directly. They have not been paid, they know where the house is, and they may say that you owe them because the work is in your house. It is a stressful conversation, so it helps to know the ground rules before it happens.
The general rule
A subcontractor's contract is with the builder, not with you. If the builder owes them money, their claim is against the builder's company, and now the liquidator. You cannot generally be made to pay the builder's debts just because the work ended up in your home, unless you engaged that tradesperson directly or agreed in writing to pay them. Paying a subcontractor out of sympathy does not reduce what you owe the builder, and the insurer will not reimburse it.
The exceptions to take seriously
Security of payment legislation exists in every state and territory, and in some jurisdictions it allows a subcontractor to serve a notice that requires you to withhold money you still owe the builder, or to attach a statutory charge to money payable under the head contract. The rules about whether these apply to owner-occupiers of residential work vary. Some of these notices carry short response deadlines, and ignoring one can have consequences. Separately, if you did engage anyone directly, their claim is real and their own contract governs it.
The practical rule is simple: do not pay anyone, do not sign anything, and do not make promises on the doorstep. Take a copy of every letter, email, invoice or notice you receive from a subcontractor or supplier and pass it to your lawyer the same day. A quick review will tell you whether it is a demand you can politely decline or a statutory notice with a clock running.
Terminating the building contract properly
Your contract did not end automatically when the liquidator was appointed. Most standard domestic building contracts contain a clause that allows the owner to terminate if the builder becomes insolvent, but you have to exercise it, in writing, in the way the clause requires. Getting this right matters for two reasons: the insurer usually needs to see a valid termination before it will treat the job as "not completed", and a new builder will not want to start on a site where another contract is still technically alive.
- Confirm the trigger first. The clause will specify events such as the appointment of a liquidator, administrator or receiver. Match the ASIC extract to the wording.
- Read the notice requirements. Some clauses require a notice period or a specific form of words. Some require the notice to be served in a particular way. Follow them exactly.
- Serve the right person. Once a liquidator is appointed, the liquidator controls the company. Send the termination to the liquidator as well as the company's registered address and the contract notice address, and keep proof of sending.
- Do not rely on a verbal conversation or a text to the builder. Put it in writing and keep a copy.
- Ask the liquidator whether they intend to disclaim the contract. Liquidators often disclaim onerous building contracts, which also brings the contract to an end. Either way, you want a clear paper trail showing when and how the contract ended.
- Record the state of the site at termination. Your photographs and any assessor report should be dated to line up with the termination.
Do not engage a new builder before the insurer has assessed the site
This is the mistake that costs people the most. Once another builder, or you, has started work, the insurer can no longer verify what the original builder left behind, what was defective, and what the completion cost would have been. Claims are reduced or declined on that basis. Wait for the insurer's assessment, get its position in writing, and only then sign a completion contract. The new builder will need a fresh contract, fresh approvals or amendments where required, and in most states a new home warranty insurance certificate for the completion works. Make sure the new contract clearly describes what is existing work the new builder is not responsible for and what they are taking on.
Deposits, the liquidator and what recovery really looks like
Is the deposit recoverable?
If you paid a deposit and work had not started, many home warranty schemes cover loss of the deposit, within a limit, provided a certificate was issued or should have been. If work had started, the deposit is treated as part of what you paid under the contract and folds into the non-completion assessment. Money that went to the company and was spent is gone from the company's point of view; your path to it is the insurance scheme, not the builder.
Lodge a proof of debt
Whatever the insurance position, lodge a proof of debt with the liquidator for everything the company owes you: overpayments ahead of the stage reached, the cost to complete above the contract balance, defects, and any liquidated damages for delay the contract allows. The liquidator will send a form and will report to creditors. Lodging costs nothing, preserves your position, and insurers commonly require evidence that you have done it.
Realistic expectations
Be clear-eyed. Home owners are unsecured creditors of a building company, behind secured lenders, the costs of the liquidation and employee entitlements. In most building company failures, unsecured creditors receive a small dividend or nothing. The proof of debt is worth lodging but is not the plan.
Finishing a half-built house also usually costs more than the unpaid balance of the original contract. A completion builder takes on the risk of someone else's work, has to re-mobilise, often has to investigate and fix defects before continuing, and will price that risk. Add the gap between the insurance cap and the true completion cost, extra rent or mortgage while the build is delayed, and the cost of your own assessor, and the total loss can be substantial even with a successful claim. Knowing that early lets you plan finance and avoid rushing into a bad completion contract.
Where the contract includes a personal guarantee from a director, or where the deposit was paid to an entity other than the one in liquidation, there may be additional recovery routes. These are fact-specific and worth a lawyer's attention.
Common mistakes that reduce the payout
- Paying a progress claim after the liquidation, or paying the director personally to "keep going".
- Letting a new builder or a mate with a ute start work before the insurer has inspected.
- Not photographing the site before materials are removed or weather damage occurs.
- Missing the claim lodgement deadline because the paperwork was not quite ready.
- Terminating by text message, or not terminating at all, so the contract is still on foot when the claim is assessed.
- Paying subcontractors directly without checking whether any obligation exists.
- Leaving the unfinished structure uninsured for weeks.
- Signing a completion contract that does not separate existing work from new work, so the new builder later disputes responsibility for defects.
- Assuming the trading name on the signage is the company on the contract.
When a construction lawyer pays for themselves
Not every builder failure needs a lawyer for every step, but there are points where a few hours of specialist advice protects far more than it costs:
- Before you terminate. A reviewed notice, served on the right parties, in the right order, removes the most common ground for an insurer or a new builder to question your position.
- Before the insurer's assessment. Advice on what to put in front of the assessor, and whether to get your own quantity surveyor report first, often changes the number.
- When the insurer disputes the stage reached, alleges overpayment, or declines part of the claim. These decisions can usually be reviewed, and the review is evidence-driven.
- When a subcontractor serves a notice. Working out within days whether it is a statutory notice with consequences or a letter you can decline.
- Before you sign the completion contract. A completion contract has different risk allocation from a new build, and the wrong terms leave you exposed to the next dispute.
- Where cover is thin or absent. In jurisdictions without a meaningful scheme, your recovery depends on the contract, any guarantees and the liquidation, and the strategy needs to be set early.
Construction lawyers who work in this area deal with the same insurers, liquidators and standard-form contracts repeatedly. Being matched with someone who does this regularly means you are not paying for them to learn the scheme on your file. Tell us what has happened and we'll match you with a lawyer, then email you their introduction. Reply to it and they'll be in touch.
Builder in liquidation FAQ
My builder has gone into liquidation and my house is half built. What do I do first?
Confirm it on the ASIC register, stop paying any progress claims, secure the site, check your insurance, photograph and video the stage of works, and do not let anyone remove materials you have paid for without the liquidator confirming the position in writing. Then find your home warranty insurance certificate and check the lodgement deadline for your scheme.
Will home warranty insurance pay to finish my house?
It is the cover designed for builder insolvency, but it is capped. In some states the amount for incomplete work is limited to 20 per cent of the contract price, and every scheme has an overall limit. Expect it to contribute to completion rather than fund it entirely, and plan for the gap.
Can the subcontractors come after me for money the builder owes them?
Generally no, because their contract is with the builder, not you. But security of payment laws and statutory charges in some states can affect money you still owe the builder, and some notices have short deadlines. Do not pay anyone and pass every demand to a lawyer the day it arrives.
Can I just get another builder in to finish the job?
Not until the insurer has assessed the site and you have terminated the original contract properly in writing. Starting work before assessment is one of the most common reasons claims are reduced, because the insurer can no longer verify what the first builder left behind.
Will I get my deposit back?
If the deposit went to the company, you are an unsecured creditor and recovery from the liquidation is usually small or nil. Many home warranty schemes cover loss of deposit where work had not started, within a limit. Lodge a proof of debt with the liquidator anyway; the insurer may require it.
My builder has walked off site but is not in liquidation. Is this the same?
No. Abandonment without insolvency is dealt with under the contract, usually by a written notice requiring the builder to return and remedy the breach within a set period before you can terminate. Terminating wrongly can put you in breach and may affect insurance. Check the ASIC register for any external administration, keep records of the days with no work, and get the notice reviewed before you send it.
Can I use the materials left on site?
Items already fixed to the house are generally part of your property. Unfixed materials are more complicated: you may have paid for them under a progress claim, but the liquidator may treat them as company assets, and a supplier may claim them under a retention of title clause. Do not use or remove them until the position is confirmed in writing, and do not let anyone else remove them either.
How long does the claim take?
It depends on the scheme, whether the insurer needs its own assessment and a tender for completion, and how complete your evidence is. A clear contract, full payment records, a dated record of the stage reached and a valid termination all shorten the process.
What if the builder never gave me an insurance certificate?
Check with the scheme or insurer directly using the builder's licence details and your address, because certificates are sometimes issued without being passed on. If no cover was ever taken out when it should have been, some schemes still respond and some do not, and the builder's failure to insure may be a licensing breach. This is a situation where early legal advice matters.
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