Building a house? New consumer protection.

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The government has brought new laws into effect from 1 January 2015 which have radically changed the residential building industry. The changes have introduced wide-ranging consumer protection measures, designed to encourage a professional, no-surprises relationship between builders and homeowners and to enable homeowners to make informed decisions about building work on their homes.

The key changes include:

  • Builders and homeowners have to have a written contract for building work over $30,000.
  • If the parties do not have a written contract, or some of the required clauses are missing, default clauses will apply.
  • Before the contract is signed, builders must give customers information about their qualifications, skills and experience (including their dispute history, product warranties/guarantees, and insurance).
  • At the same time, builders must also give customers a checklist (written by the government) to ensure the customer is aware of the risks of the building work and the legal obligations of both the builder and the homeowner in relation to the work. This checklist must be handed over for work under $30,000 if the customer asks for it.
  • At the end of the job, builders must give customers copies of all relevant insurance policies, guaranties, warranties, and maintenance requirements (this applies regardless of the cost of the building work).
  • There is an automatic one year ‘defect repair period’ (from the date of completion) in which builders must remedy any defects identified by the homeowner, unless they can prove the workmanship or materials are not defective.
  • Building contractors can be fined if they don’t comply with new law (and could be disciplined by the Building Practitioners Board).
  • New remedies for breaches of implied warranties in the Building Act, including if the breach is substantial you can cancel the contract with your builder immediately.

What is building work?

Building work is defined broadly, including any work in relation to the construction or alteration of a building. This includes work which does not require building consent, and could extend to concrete laying, pool builds, landscaping, roofing, cladding, and everything in between.

What do the changes mean for builders?

Builders have had to comply with the changes since 1 January 2015.

There are four sets of documents builders need to give to their customers:

  1. A written building contract to be signed and dated before the work is carried out. Various standard form contracts are being published by the various industry organisations, including Standards New Zealand, New Zealand Institute of Architects, Master Builders, and Certified Builders.
  2. Checklist to be given to customers. This has been available on the MBIE website from January 2015.
  3. Disclosure to be given to customers. A template for this has also been published by MBIE.
  4. The copies of the various documents to be given to the customer at the end of the job (insurance policies, guarantees, warranties, maintenance requirements).

What do the changes mean for homeowners?

Homeowners doing any building work can expect to receive the information discussed above from the builders. If they do not get it up front, they should ask for it.

If homeowners have concerns that the new laws are not being complied with, they should raise their concerns with their builder (or the home building company) in the first instance, or with MBIE.

We can help

We would be happy to answer any queries from builders or homeowners in relation to these changes or more general issues in the building industry.

Contact Jeremy Browne.

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