By: Annabel Sheppard
Thinking of building or renovating?  The Building Amendment Act 2013 now prescribes what information must be contained in a building contract, what information must be disclosed to a consumer and other new consumer protection measures.  Make sure you are aware of these changes before signing on the dotted line.

In the wake of the leaky house crisis and the increase in building activity in major centres such as Christchurch and Auckland, the residential building sector has come under the spotlight.

In response to this, Parliament reviewed the Building Act 2004 (the Act).

The review identified the need to, among other things, clarify the responsibilities of builders to consumers and better equip consumers to transact with confidence for building work.

On the completion of the review, the Building Amendment Act 2013 (the Amendment Act) was passed by Parliament on 27 November 2013.

The Amendment Act introduces new consumer protection measures and provides incentives for the building sector to improve their accountability to consumers. Prescribed information must now be supplied to consumers throughout the building process aiding consumers to be better placed to make informed decisions about what builder they use to complete the work.

The consumer protection measures provided for in the Amendment Act came into force on 1 January 2015 and include:
  1. The supply of prescribed information before a residential building contract is entered into.
  2. Mandatory written contracts for residential building contracts over $30,000.00 (inclusive of GST) or more.
  3. A checklist to be provided to the client of a residential building contract where work is valued at over $30,000.00 (inclusive of GST) or when requested by a client.
  4. Minimum content requirements that must be included in all residential building contracts.
  5. Implied warranties for residential building works.
  6. Information that a building contractor must provide to a client after the completion of building work under a residential building contract.
  7. Defective building work to be notified and remedied within 1 year of completion.
  8. Providing remedies for breaches of warranties
  9. Infringement fees for breaching the contract, disclosure or checklist requirements.

Click here for an example of the contract and click here for an example of the checklist.

Consumers will greatly benefit from the additional transparency and supply of information.

This added transparency may avoid disputes between parties as many building contracts will now be in writing allowing both parties to have a better understanding of their rights and obligations under the contract before the commencement of work.

The period you have to notify the builder of any defects after the completion of building work, commonly known as the "defect period", is now 1 year as opposed to a different period set by each individual builder. If a defect is discovered, a builder is now under an obligation to inspect and remedy a defect in a timely manner which should go some way to reduce the length of time a consumer has to wait for the defect to be remedied and requires the builder to engage with consumer. 

The Amendment Act also sets out remedies where there is a breach of the provisions Amendment Act providing consumers with a clear course of action should things go wrong.

The provisions in the Amendments Act cannot be contracted out of, meaning that consumers must get the same information from all builders and building companies allowing them to easily compare the information provided.

While regulation will not fix all of the issues within the building sector, it does provide incentives for building professionals, tradespeople and consumers to behave in ways that will contribute to a productive efficient and accountable sector.

Over time it is hoped that the provision of information will steer consumers away from the unreliable poor performing builders resulting in a market driven refinement of the sector.  

Your house is a substantial investment and it is therefore important that you understand and are happy with the terms of a building contract when building a new home or undertaking major renovations, before you sign any agreement. 

Our Private Client team at Wynn Williams are always happy to assist you with a review of your building contract or answer any questions you may have.

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