The state’s building industry regulator has cautioned customers, subcontractors and suppliers over Modco Residential's ability to pay its debts.
The state’s building industry regulator has cautioned customers, subcontractors and suppliers over Modco Residential's ability to pay its debts.
Building and Energy WA has received information from several owners, subcontractors and suppliers leading to growing concerns about the builder’s capacity to pay its debts.
The industry watchdog has also received reports that in some cases, no work was taking place and that progress payments were being demanded in advance of being due.
Building and Energy said it has made several attempts to communicate with Modco’s director and nominated supervisor to gain an understanding of the company’s financial position but neither had been responsive.
Executive director Saj Abdoolakhan issued a word of caution to people working with Modco.
“Anyone dealing with Modco should be cautious and should only give credit when the company confirms its financial position or when due diligence has been exercised to confirm that any progress payments are for works that have been completed or for goods that have been supplied,” Mr Abdoolakhan said.
In March, Business News spoke with several Modco customers about their two-year wait for construction to start on their homes, leading one client to walk away from the build and sell the block.
Another customer, who spoke with Business News, said they had been living in a caravan while waiting on Modco to complete construction on their home.
In today's statement, Building and Energy said there were reports of Modco’s subcontractors not receiving payment for services provided and a number of court actions for unpaid debts.
“The fact that there are several court actions against Modco as well as reports about delays in completing building work are strong indications that the company may be under significant financial stress,” Mr Abdoolakhan said.
Saj Abdoolakhan says Building and Energy has made several attempts to contact Modco to decipher its financial position. Photo: Building and Energy
Building and Energy is also investigating whether Modco’s building services are being properly managed and supervised.
“All registered building contractors must not build without an effective nominated supervisor,” Mr Abdoolakhan said.
“They are required to notify the Building Services Board if they are no longer able to meet their financial obligations or of any change that may affect their entitlement to be registered under the Building Services (Registration) Act 2011.”
Building and Energy said if Modco were to enter administration, affected homeowners would be able to make a claim on their policy of home indemnity insurance.
Earlier this year, Business News reported that one Modco salesperson had signed as many as 84 new home contracts in four weeks in late 2020, just months after the builder registered with the Australian Securities and Investments Commission.
At the time, Modco claimed on Facebook that the flurry of contract activity was an industry record number of sales while clients claimed the builder was grappling to keep its claim of a 20-week build guarantee.
The company has also increased the price tag on several builds, with one customer reportedly having faced a $57,000 cost blow out.
There have also been reports of Modco having struggled to secure sufficient insurance to cover its contract pipeline.
