Your Builder Has Gone Bankrupt—Now What? How to Navigate This Difficult Time and Move Forward With Confidence

When a builder goes into liquidation, it can feel like the rug has been pulled out from under you. You’ve already invested so much—emotionally, financially, and in many cases, years of your life—only to be left with an unfinished home and a long list of unanswered questions.

We’ve supported many families through this exact situation, and while the road ahead can be overwhelming, there is a clear path forward. You’re not alone, and there are steps you can take to protect yourself, recover some of your investment, and get your dream home completed.

Here’s a guide to help you move forward after your builder goes bankrupt.

Step-by-Step: What To Do If Your Builder Goes Bust

1. Register for Insurance Claims Immediately

Most builders are covered by home indemnity insurance—typically through providers like QBE . Once a builder is officially in liquidation, insurance portals usually open for claims. Register your account as early as possible to avoid delays.

2. Speak to Your Finance Broker

Check the current terms of your construction loan. You’ll likely need a time extension and possibly a revised loan assessment. Your broker can guide you through how to apply for both.

3. Secure Your Property

Once a builder enters administration, their insurance becomes void. This leaves your site uninsured and vulnerable.

If the build is past lock-up, collect your keys (if accessible) or hire a locksmith to secure the property.

Be aware: No general insurer currently provides coverage for incomplete builds, so site security is essential.

4. Conduct a Site Inspection

Visit the property and thoroughly document everything. Take videos, clear photos, and notes of the build status. This documentation will help in quoting and submitting claims.

5. Get an Independent Inspection

Hire a licensed building inspector to:

• Confirm compliance with building codes

• Identify defective or unsafe work

• Outline any rectification work needed

This provides a baseline understanding of what’s been done—and what needs fixing.

6. Gather Your Documents

You’ll need a comprehensive package of all project-related documents, including:

• Building contract

• Council-approved plans

• Engineering reports

• Addenda and all variations

Having these ready will streamline quoting and claims processing.

7. Obtain Ballpark Estimates

Contact reputable builders experienced in takeover projects. Not all builders accept these complex jobs, so ask upfront about their experience. Get a general idea of:

• Cost to complete the build

• Additional cost to rectify any issues

This helps assess your financial position before committing further.

8. Review Your Financial Capacity

With support from your broker, determine if you can fund the remaining build. If there’s a shortfall, explore options:

• Additional lending

• Government support (if applicable)

• Personal finance strategies

9. Secure Full, Fixed-Price Quotes

Shortlist builders who are financially stable and experienced in rectification projects. Request detailed quotes that include:

• Completion of all outstanding works

• Required rectification work

• Updated selections if certain materials are discontinued

Transparency at this stage is key to avoiding surprise costs down the track.

10. Review Quotes Thoroughly

Compare quotes carefully. Consider:

• Scope of works

• Timeline to completion

• Terms and exclusions

• Quality guarantees and contract details

Don’t rush this step—it’s essential to get it right.

11. Submit Your Insurance Claim

Once you’ve chosen your preferred builder and finalised your quote, submit everything to your insurer. Be aware they may send their own inspector to validate the work, which can add 1–2 weeks to the process.

12. Funds Released

If approved, the insurer may release up to $200,000 (depending on your policy) to help complete your build. These funds usually go directly to you but must be used strictly for construction-related expenses.

13. Sign With Your New Builder

Once the insurance funds are secured and paperwork is finalised:

• Sign new building contracts

• Attend a new pre-start appointment (as some original selections may no longer be available)

• Restart construction under a revised schedule

14. Independent Oversight Throughout

We strongly recommend independent inspections at every stage of progress. These ensure each milestone is completed to code before you release payments.

15. Maintain Clear Communication

Keep communication lines open between:

• Your new builder

• Your inspector

• Your finance broker

• Your insurer

Transparency and regular updates will help avoid delays and confusion.

🔒 How to Protect Yourself Moving Forward

Builder liquidations are happening more often—and unfortunately, many families get caught without warning. Here’s how to protect yourself in the future:

Do your due diligence: Ask questions about a builder’s financial health, insurance capacity, and current pipeline of work.

Work with proven teams: Always choose a builder with a solid track record—especially in takeover projects.

Seek professional advice: Don’t go it alone. Builders, inspectors, and brokers can help safeguard your investment at every step.

✅ Final Thoughts

Losing your builder is a devastating setback—but it’s not the end of your home ownership journey.

At Patterson Construction, we understand the stress, the uncertainty, and the emotional toll this takes. We’ve supported clients through it before, and we’re here to offer advice, guidance, and (if you're ready) a safe way to finish your home.

Let this be the turning point—not the breaking point.

You deserve a home that’s completed to the highest standard. We’re here to help you get there.