If your builder or developer goes into voluntary administration, the single thing that decides how exposed you are is what kind of contract you signed and where your money physically sits. An off-the-plan buyer whose deposit is sitting in a solicitor's trust account is in a very different position to someone who has paid progress claims to a building company that has just stopped paying its staff. Both look the same from the outside. They are not the same at all.

Andrew covered this with mortgage broker Keaton Howard in a recent podcast episode on what the Bathla collapse means for deposits and mortgages, and the conversation kept coming back to one point: most of the damage in a builder collapse isn't caused by the insolvency itself. It's caused by people making fast decisions about contracts and finance before they understand which bucket they're in.

What's actually happened at Bathla

Teneo was appointed voluntary administrator to the Bathla Group and a large number of its subsidiaries in late August 2026. The scale is unusual. The NSW Supreme Court heard the group covers 542 companies, employs around 349 staff and has 219 construction projects running, with 45 of those in the construction phase, and the administrator described it as an extraordinarily complex administration, according to ABC News reporting on the court orders.

Roughly 2,000 homes are under construction and about 13,000 more sit in the pipeline. Bathla asked the NSW government for a $20 million lifeline and was knocked back, and administrators later secured a short-term package of between $3 million and $5 million from five lenders that keeps only about 14 of the 45 active sites going, with around 213 staff stood down, as the ABC reported on 7 September. Preliminary creditor figures put total debts near $3.4 billion, with about $3.08 billion owed to secured lenders.

For buyers the practical detail is brutal. Insolvency practitioner Chris Baskerville told the ABC that projects 80 per cent complete or more get assessed for commercial viability, while a half-built property has almost virtually no value. That's the whole problem in one sentence. A slab and a frame aren't worth much to anyone, which is why a new builder or a lender can be reluctant to pick up a stalled site.

Where your deposit sits, and what that protection really covers

NSW has genuinely strong rules for off-the-plan deposits, and they are worth knowing precisely. Under section 66ZT of the Conveyancing Act 1919, deposit or instalment money paid under an off-the-plan contract must be held as trust money by a real estate agent, a licensed conveyancer, or as trust or controlled money by a law practice. NSW Government guidance puts it plainly: deposit money can't be released to the vendor before completion, and that's what protects it if the developer becomes insolvent.

So an off-the-plan apartment deposit held correctly in trust is usually not sitting inside the collapsed company's bank account. It is not a pool the administrator can simply hand to secured lenders. That is real protection and it matters.

Here's where people overstate it. The trust rule protects the deposit. It does not guarantee the building gets finished, it does not compensate you for a rising market while you wait, and it does not automatically give you a right to walk away and get the money back. Administrators for Bathla told buyers they weren't in a position to refund deposits, and that whether a buyer could terminate depends on the contract and their individual circumstances. A lawyer quoted in the ABC's coverage warned buyers not to try to terminate without legal advice, which is the right warning. Terminating wrongly can cost you the deposit you were trying to protect.

And the trust rule is about off-the-plan land contracts. If you signed a residential building contract, say a knockdown rebuild or a build contract on land you already own, you've been paying progress claims directly to the builder as stages complete. That money isn't in trust. It's gone into the business, and you rank as an unsecured creditor for anything you've overpaid.

Home building compensation cover, and its hard limits

The NSW safety net for build contracts is the Home Building Compensation scheme, run by icare. It's compulsory for residential building work over $20,000, and the builder must give you evidence of cover for your property before starting work or taking any payment, including the deposit. Cover responds to defective or incomplete work where the builder becomes insolvent, dies, disappears, or has their licence suspended for not complying with a tribunal or court money order, per icare's homeowner guidance.

The limits are where expectations break. icare's homeowner fact sheet sets a total policy limit of $340,000 per dwelling across everything the policy covers, and a separate sub-limit for non-completion of 20 per cent of the contract price as varied. On a $700,000 build, that non-completion cap is $140,000. If the cost to finish a stalled job blows out beyond that, the gap is yours.

Timing bites too. A claim for incomplete work must be made within 12 months of the date work stopped or failed to start. Major defects run six years from completion, other defects two years. There's also a structural gap that catches a lot of apartment buyers: NSW Government guidance confirms the scheme doesn't cover multi-unit buildings more than three storeys high. If you're buying into a mid-rise or high-rise tower, home building compensation cover is not your protection. Your protection is the trust account, the contract, and the sunset clause provisions.

What voluntary administration does and doesn't mean

Voluntary administration is not liquidation. ASIC's guide for creditors describes it as a process that gives a company breathing space while an independent administrator investigates and reports on the options. At a second creditors' meeting, usually about five weeks in although courts allow longer in complex cases, creditors decide between handing the company back to its directors, accepting a deed of company arrangement, or winding it up.

Teneo made the same point to Bathla customers early: administration doesn't automatically mean a development won't be completed, doesn't automatically mean liquidation, and doesn't automatically mean purchasers have lost their deposits. It also doesn't mean you should stop performing. Buyers close to settlement were told to keep preparing for settlement under their existing contracts unless advised otherwise, keep complying with the contract, and hold on to contracts, receipts and correspondence.

My honest opinion: the document discipline is the most undervalued step. People chase news updates and ignore the boring folder of paperwork that will determine whether they can make a claim, prove a payment, or establish a termination right twelve months from now.

The finance side, where the quiet damage happens

A build delay of a year or more collides with a falling market, and that's the trap Keaton kept pointing at. Values are going backwards right now. Cotality's index recorded a 0.9 per cent national fall in August 2026, with Sydney down 1.4 per cent, Melbourne down 1.1 per cent and Perth down 0.8 per cent, taking the national median to $912,885, according to Cotality's Home Value Index results as at 31 August 2026.

If you contracted at a price above what the property now values at, your existing lender may still settle you on the contract price while a new lender won't. That's how borrowers get stuck. You can't refinance away from a rate you don't like, because moving lenders means a fresh valuation and a fresh loan-to-value calculation.

Valuations themselves come in tiers. A desktop valuation uses data only, a kerbside is done from the street, and a full valuation involves an internal inspection. Different lenders order different types, and a stalled or part-built property is exactly the case where a desktop result and reality diverge. Chasing the highest number is also a mistake. A high valuation from a lender with tighter servicing rules, worse pricing or a slower process is worth less than a slightly conservative one from a lender that will actually fund you.

Then there's lenders mortgage insurance. It protects the lender, not you, and NAB's explanation is clear that it isn't transferable between institutions. Refinance to a new lender below their deposit threshold and you can pay a second premium on the same property, on top of whatever you paid the first time. When your equity has been eroded by a falling market, that's a real cost of switching.

For first home buyers there's a workaround worth knowing. The Australian Government 5% Deposit Scheme, formerly the Home Guarantee Scheme, lets eligible first home buyers purchase with a 5 per cent deposit, and single parents or legal guardians with 2 per cent, without paying lenders mortgage insurance. Since 1 October 2025 there are no income caps and no waitlists. It's applied for through a participating lender, not directly with Housing Australia, and price caps apply: $1.5 million for Sydney and $800,000 for listed NSW regional centres.

What to do if your builder collapses

Work through this in order rather than reacting to headlines.

  • Find out which contract you actually have. Off-the-plan land contract, or a residential building contract with progress payments? The answer changes everything else.
  • Ask your conveyancer or solicitor in writing to confirm where your deposit is held and on what terms, and get the trust account confirmation on file.
  • Dig out your home building compensation certificate if you have a build contract, check the contract price, and diarise the 12 month window from when work stopped.
  • Don't terminate, sign a variation or accept a novation to another builder without legal advice on that specific contract.
  • Talk to your broker or lender early about your finance approval expiry, whether a revaluation is coming, and what a lower valuation would mean for your loan-to-value ratio and any mortgage insurance.
  • Register as a creditor if you're owed money, and keep every receipt, variation, email and progress claim in one place.

Nobody gets a good outcome from a builder collapse. You can get a much less bad one by knowing exactly which protections apply to you, and by not spending your options in the first fortnight.

Frequently asked questions

Is my off-the-plan deposit safe if the developer goes into administration?

In NSW, deposit and instalment money under an off-the-plan contract must be held as trust or controlled money by an agent, licensed conveyancer or law practice, and cannot be released to the vendor before completion. That protects the cash from the developer's creditors. It does not guarantee the building is finished or give you an automatic right to terminate and take the money back.

Does voluntary administration mean the project is dead?

No. ASIC describes voluntary administration as breathing space while an independent administrator reports on the options. At the second creditors' meeting, usually about five weeks in, creditors choose between returning the company to its directors, a deed of company arrangement, or liquidation. Some projects continue, some are sold, some stop.

How much does home building compensation cover pay in NSW?

icare's homeowner fact sheet sets a total policy limit of $340,000 per dwelling across all covered loss, with a sub-limit for non-completion of 20 per cent of the contract price as varied. Claims for incomplete work must be made within 12 months of work stopping. Buildings over three storeys are not covered.

Do I have to pay lenders mortgage insurance again if I refinance?

Possibly. LMI protects the lender and is not transferable between institutions. If you move to a new lender and your loan-to-value ratio is above their threshold, you can be charged a fresh premium on the same property. A falling valuation makes that more likely, which is why some borrowers stay put.

What is the Australian Government 5% Deposit Scheme?

It lets eligible first home buyers purchase with a 5 per cent deposit, and single parents or legal guardians with 2 per cent, without paying lenders mortgage insurance. Since 1 October 2025 there are no income caps or waitlists. You apply through a participating lender, not Housing Australia, and property price caps apply by location.

Should I terminate my contract if my builder collapses?

Not without legal advice on your specific contract. Whether a right to terminate exists depends on the contract terms and your circumstances, and terminating wrongly can put the deposit you are trying to protect at risk. Administrators for Bathla told buyers close to settlement to keep preparing to settle unless advised otherwise.

Why would another builder refuse to take over a half-finished home?

Because part-built work carries unknown defect and warranty risk, and the remaining scope often costs more than the money left in the contract. An insolvency practitioner told the ABC that a half-built property has almost virtually no value, and that projects 80 per cent complete or more are the ones most likely to be assessed as viable.

Want a second set of eyes on how this affects your own position? Apply for a Strategy Session.