What to Do When Your Builder Goes Bust: A Homeowner’s Guide to Recovery
When a builder collapses mid-project, the shock is real: the site sits exposed, money is tied up, and your family’s plans feel derailed. Recovery is possible. This guide explains exactly what to do in Victoria right now—who to notify, how Domestic Building Insurance (DBI) works, realistic timelines, and how a completion builder like Dreamline Homes can help stabilise, assess and finish works.
Scope: Victoria (domestic building). If you’re outside VIC, processes and coverage differ—seek local advice.
First, acknowledge the emotional toll
We know that when a builder goes under, it isn’t just a project that stalls — it’s your family’s future that feels put on hold. You’ve poured your savings, trust, and vision into this home, and now it can feel like the rug has been pulled out from under you. The stress of wondering if you’ll ever get back on track is real, and it can take a toll on your family life as much as your finances.
At Dreamline Homes, we see you. We know you’re not just looking for someone to “finish a job” — you want a builder who will steady the ground beneath you, treat your investment with respect, and guide you with honesty and care. Our role is to bring clarity back into the process, so you can focus on your family and know that your home — and your trust — are being rebuilt with the quality and transparency you deserve.
Worried about your half-built home?
We’ve helped Melbourne families stabilise sites and rebuild after collapse. Book a no-obligation call with Scott to understand your options and next steps.
Confirm what’s actually happened
Check the company’s status.
Search the ASIC registers (company search and insolvency notices) to confirm administration, liquidation or deregistration. Keep screenshots and any liquidator contact details.
Identify the appointed external administrator.
If a liquidator/administrator has been appointed, they’ll provide instructions about the site, documents, and creditor communications.
Immediately protect people, the site and your position
Secure the site. Arrange temporary fencing, weatherproofing, and lock-up if possible. These costs are commonly treated as part of “incomplete works” under DBI (within limits).
Stop further payments. Tell your lender (if any) and pause progress drawdowns until an independent assessment verifies the percentage complete.
Contact your building surveyor. Ask for the current permit status, issued stage inspections, and next compliance steps. If a permit was required, the surveyor should have sighted the DBI certificate—this helps you locate your policy.
Collect your documents. Gather your contract, variations, payment ledger, inspection reports, plans/specs, DBI certificate, correspondence, photos/video of the site, and receipts.
Understand your insurance safety net (DBI in Victoria)
What DBI covers:
DBI protects homeowners if a builder dies, disappears or becomes insolvent, covering non-completion and certain defects for domestic building projects over $16,000. Coverage for defects typically lasts 2 years (non-structural) and 6 years (structural) from completion/occupancy.
Policy limits and caps:
For policies issued on/after 1 July 2014 the overall cap is up to $300,000 (previously $200,000). For incomplete works, DBI generally covers up to 20% of the building contract price (within the overall cap). Always check your exact policy wording.
Where to claim (since 1 July 2025):
Victoria has created the Building & Plumbing Commission (BPC), which now houses DBI functions previously managed by VMIA; claims for VMIA-issued DBI policies are administered through the BPC portal.
Reality check: DBI is a safety net, not full completion insurance. It may not fully cover the total cost to finish a project—especially when markets move or defects are substantial. Recent public reviews and the Auditor-General highlight pressures in the system and claim backlogs.
Step-by-step: Making a DBI claim
Locate your DBI certificate and policy wording. Your builder was required to provide DBI for permitted residential work over $16,000. If you can’t find it, your surveyor records and BPC/VMIA portals can help.
Notify the insurer/portal (now BPC). Open a claim for insolvency / non-completion. Use the BPC DBI portal to lodge evidence (photos, contract, payment history, inspection stages).
Commission an independent assessment. Obtain a forensic scope of works: % complete by stage, defects list, and cost-to-complete.
Coordinate with your lender and liquidator. Banks normally require an independent %-complete assessment before releasing further funds; liquidators may seek access or information.
Mind the caps/timelines. Understand the 20% incomplete-works cap and the overall policy cap; track dates for lodging and responding to requests.
Need clarity on your project’s cost-to-complete?
Before you commit to another builder, get an independent assessment and a fixed-scope proposal. Contact Dreamline Homes to discuss how we align with surveyors, lenders, and insurers to move your project forward with certainty.
If DBI doesn’t apply or isn’t enough
You can still seek help through Domestic Building Dispute Resolution Victoria (now transitioning into the BPC’s dispute service) and, if necessary, VCAT. Legal advice from a construction lawyer is recommended.
How to choose a completion builder (our process at Dreamline Homes)
Stabilise → Assess → Rebuild is our playbook for takeover projects:
Stabilise the site: make it safe and weather-tight, create a photo/video baseline (often recoverable under DBI).
Independent assessment and scope: we coordinate independent consultants to establish % complete, defects, and cost-to-complete.
Regulatory alignment: liaise with your building surveyor to confirm inspections and permit status.
Fixed-scope proposal: clear completion contract, sequencing rectification and completion to minimise rework.
Claim support: we supply the evidence insurers and lenders need — from defect close-outs to costed completion programs.
We’ve helped Melbourne families stabilise half-built projects, unpack hidden defects, and bring them to completion with transparent weekly updates and a quality handover.
Checklist for homeowners
✅ Confirm insolvency on ASIC registers
✅ Secure and document the site
✅ Pause payments and notify your lender
✅ Contact your building surveyor for records and DBI certificate
✅ Lodge your DBI claim via the BPC portal
✅ Obtain an independent assessment
✅ Shortlist completion builders experienced in takeovers
Key facts (quick reference)
DBI is mandatory for domestic projects >$16,000
Coverage triggers: insolvency, death, disappearance
Defects cover: 2 years non-structural, 6 years structural
Policy cap: up to $300,000 (since 2014), with 20% cap for incomplete works
Claims now via: Building & Plumbing Commission DBI portal
Final word
When your builder goes under, the path forward feels uncertain — but you don’t have to face it alone. With the right steps, trusted experts, and a completion builder who understands both the technical and emotional stakes, you can steady the ground and see your vision through.
At Dreamline Homes, our role is to rebuild not just the project, but your confidence in the process.
Facing a builder collapse? You don’t have to navigate it alone.
Dreamline Homes specialises in helping families across Ivanhoe, Alphington, Fairfield, and Plenty stabilise half-built projects and bring them to completion — with transparency, care, and fixed-price assurance.
👉 Book a confidential consultation today
⚠️ Accurate as at 17 September 2025. General information only — not legal advice. Always check your DBI policy and seek independent advice for your circumstances.