Louisa and David Booth had planned on marrying at their newly built dream Invercargill home. Instead the build was never started and the couple lost $150,000. Photo / Supplied
Louisa and David Booth had planned on marrying at their newly built dream Invercargill home. Instead the build was never started and the couple lost $150,000. Photo / Supplied
Invercargill bride and groom lose $144,000 and have their plans thrown into disarray by Compass Homes franchisee builder's collapse.
January should have been one of the most joyous moments of Louisa and David Booth's lives.
They had planned to start the year by marrying on the grounds of their newly-built,dream home in Invercargill
They gave Compass Homes franchisee builder Mark George a year's advance notice and paid his company $194,000 for the project.
But George's company went into liquidation before starting work on the build.
Unable to afford their dream home, they are now being forced to convert what would have been the shed on their site into a one-bedroom studio that feels more like a "motel room".
They also had to delay their wedding until April, hiring a local hall for the celebrations instead.
Compass Homes' franchise head office is not accepting any financial responsibility for the failed project. It previously listed George as one of its "network of local build professionals".
It says George alone is to blame. George said he had no comment for this story but last month said he "deeply regrets" the position his clients were in.
With this being her first home build project, Louisa Booth says she didn't understand "how franchises worked" and thought she had been partnering with George and Compass Homes on the build.
"We thought we'd signed up to Compass Homes, all our plans had Compass Homes on it," she says.
The Booths are now among a collection of customers of George and Compass Homes who are sounding a warning to other Kiwis.
Louisa and David Booth lost $150,000 when their builder went into liquidation. Photo / Supplied
The customers, who have collectively lost hundreds of thousands of dollars, say they chose to buy through a "nationwide builder" believing it gave them greater protection in the event the build went wrong.
But they believe national builders operating as franchises do not necessarily provide extra levels of protection.
Compass Homes is one of several major New Zealand home building companies operating as franchises.
The arrangement allows major brands to attract new clients and then farm the work out to builders, who, in return, pay franchise fees.
Jonathan Wood, senior property lawyer with Court One, says franchise brands often set up contract arrangements with their franchisees to ensure the brand cannot be held legally responsible for the build projects.
It means buyers "are not getting the peace of mind that a national builder is going to be able to step in and fix these problems", he says.
"What you are buying is the brand, but the person sitting behind the brand may be someone who doesn't have a great track record and possibly has problems."
For the Booths, that has resulted in a huge financial loss.
After Compass Homes put them in contact with George, they signed up to build a four-bedroom home on their Invercargill land.
They paid their initial $71,921 deposit to George's company early last year then George asked them in June 2021 to bring forward the payment due after the first stage of works was completed.
David Booth standing by a shipping container that was supposed to have been filled with building materials. Photo / Supplied
They say George told them building material costs were rising and if they paid the next payment early, the materials could be secured at current prices and stored ready for the build.
The Booths paid George's company an extra $122,274, but one month later Compass Homes terminated its franchisee arrangement with George.
The Booth's home was never started.
Through their Master Build Guarantee they were able to claim back about $50,000, but they say they're still owed $144,195.
Louisa Booth says they paid George the first stage payments early because this was their first build project and they believed him. But they say they will never again make the mistake of making payments early.
Fellow home buyer Kelly Gay also estimates he has had to spend $70,000 extra after terminating his build contract with George early.
He says, in his opinion, George appeared incompetent early on in the build.
Gay - like the Booths - says Compass Homes' head office staff reached out to him to offer help but did not offer financial compensation.
He ended up completing his build with the help of Compass Homes but was not entirely happy with the extra cost or being forced to project manage it himself.
Koria expects to have to pay an extra $140,000 to finish his build on top of the $300,000 he already paid George.
Louisa Booth at the couple's vacant Invercargill block. Photo / Supplied
A liquidator's report into George's companies' finances shows more than 10 other material suppliers and trades companies claim they are also owed money.
The Inland Revenue Department claims $140,000 is owed to it.
In a text message sent to the Herald on Sunday in June in response to Koria's story, George said he deeply regrets the position his "clients, staff and suppliers have been put in due to the collapse of the company".
George said his company ran out of money due to industry-wide "pricing issues, construction delays, supply issues" and "debtors" from whom he was waiting payment.
His customers say they believe the issues were also likely due to George's mismanagement of his companies.
When asked what systems Compass Homes has in place to check on its franchisees and protect customers, the company's group director Garry Shuttleworth told the Herald on Sunday all its franchisees must be members of the Master Builders Association.
He said "it is not an easy process to become a Master Build member" because the association vets its members thoroughly.
The Master Build Guarantee and contract give certain protections to buyers, Shuttleworth says.
Wanaka buyer Krish Koria also had a nightmare experience after his home was left half finished by his builder. Photo / Sylvie Whinray
"However, if a client chooses not to take up the Master Build Guarantee or if they operate outside the parameters of the Master Build contract, no builder, whether a group home builder, such as Compass Homes, or an independent can reasonably be expected to be held responsible for that," he says.
He says the contract is designed to avoid having customers pour too much money into a house build before it is completed - that is why payments are staged.
Compass Homes strongly advises against making payments early, as he understood the Booths had, Shuttleworth says.
He says fellow home buyers Gay and Koria did not take up Master Build Guarantees.
"Regardless of this, we completed Kelly's build at cost, which meant a loss to Compass Homes."
