Residential Building Contracts – Changes
New laws included in the Building Amendment Act (2013), will increase residential builders’ potential liability.
These new laws will increase residential builders’ potential liability under the terms of the new contracts they are required to provide to their clients.
The new Act applies from 2015 to all residential building work costing $30,000 or more, if the builder’s customer is the home owner. If the building contract does not contain all the clauses required by the Act, the Act will apply those clauses to the agreement by default. Before the contract is entered into, the builder will need to hand over a checklist of essential terms, together with a document that tells the potential customer all about the builder, his company and the insurance cover he carries. Also, any guarantees and warranties that apply to their materials and workmanship. In addition, a defects liability period will apply for a minimum of 12 months when the builder will need to fix at his expense any building defects. In addition, the builder is liable for current and future owners of the home for a range of 10 year warranties under the Building Act 2004.
Many builders including those training through merchants like ITM and Certified Builders and Master Builders have been informing their customers and members for some time of the new changes.
As far as residential customers are concerned, the 4 documents they should be receiving from their builders in the future will comprise: 1) the checklist that has to be provided at the time the contract is entered into; 2) a disclosure statement describing the builder’s business, company and insurance and guarantees; 3) the written building contract which must incorporate the essential clauses provided in the Act; and 4) the insurance policies, guarantees and warranties that the builder is required to inform the customer of at the end of the project.
For builders who are using standard form contracts put out by Master Builders or other franchised groups, the documentation is well advanced and should be available to customers in 2015. For other builders, they will need to review their existing documentation as a matter of urgency to ensure compliance with the new Act. For help in preparation of new documentation, our property team can assist.
For independent advice for homeowners concerning residential building contracts, our property team will review those contracts and ensure they comply with the new rules. Ph. 06 835 3069 or email firstname.lastname@example.org for further information.
Guides to the law
Here are links to the New Zealand Law Society law awareness pamphlets.