Construction Company Liquidation And The Homeowner

What Happens to Homeowners When a Construction Company Goes into Liquidation?


The effects of the Covid-19 pandemic have forced many companies into liquidation with the building industry being hit particularly hard. Many families have been left with uncertainty as construction of their homes comes to standstill. Miller Sockhill Lawyers will explore what it means when a company goes into liquidation and the steps you can take to recover your losses.


What Does it Mean When a Company Goes into Liquidation?

If a company is insolvent, it is known to be ‘winding up’ or has gone into liquidation. Under the Corporations Act 2001 a company becomes insolvent when they are unable to pay all of their debts as they become due and payable.

There are two types of winding up, compulsory and voluntary. In both instances, a liquidator is appointed to ensure the proper administration of the company.

Liquidators may execute a number of powers given to them under the Corporations Act 2001 that are necessary to facilitate the winding up of the company. Once a liquidator has been appointed, any claims brought forward by creditors against the company are suspended and are unenforceable. This means that a company cannot be sued once a liquidator has been appointed. However, a creditor may apply for a claim with the liquidator.


My House is Unfinished, and the Builder Has Gone into Liquidation, What Do I Do?

In some instances, the liquidator will be responsible for sourcing a new builder who can complete your home. They may communicate this to you in a letter or otherwise. If this is the case, you should follow up with them in the first instance.

If the liquidator cannot source a new builder to complete the contract and your home is left unfinished, you can lodge a claim with the QBCC for non-completion of building work.


The Home Warranty Scheme 

The QBCC is responsible for managing the Queensland Home Warranty Scheme. The Home Warranty Scheme allows a property owner to make an insurance claim against a building company if the company is unable to complete a building contract because they have gone into liquidation.

Claims under the Home Warranty Scheme can only be filed when the insolvent building company has had their QBCC licence cancelled. Once a claim has been filed, the QBCC may send out an agent to the build site who will perform a valuation on your property and assess the value of your claim.


What Next?

The team at Miller Sockhill Lawyers have significant experience in acting for property owners who find themselves in a building dispute.

If you’re unsure of what step to take next or if you need more specialised advice, please contact the friendly team at Miller Sockhill Lawyers on (07) 5444 4750 today – we will be happy to speak with you about your options and will tailor our advice to suite your unique situation.


If you would like any further information regarding residential or commercial property law, please see our previous articles on: Building Defects and Limitations of ActionSunset Dates When Buying Off The Plan and Community Titles Schemes.