Consumer Protection Measures

New consumer protection measures in the Building Act 2004 are now in place for residential building work or renovations started on or after 1 January 2015.

Before building work starts

The contractor must provide a standard checklist to potential clients if they request it or if the building work is likely to cost $30,000 or more (before signing the contract). A checklist has been prepared by the Ministry covering the content required by law and includes information on how building projects are managed, hiring contractors, what should be covered in a written contract and resolving disputes.

If the work is $30,000 or more including GST (or if the homeowner requests it) the contractor must provide information about his or her skills, qualifications, licensing status and the insurance or guarantees they provide in a disclosure statement before you sign a contract. Only the party you are contracting with has to provide this information (ie your contractor may have hired other workers to help complete your building work, but they do not need to disclose this information). If any of the disclosure information seems unusual, query it with the contractor.

A template of the disclosure statement and the prescribed checklist has been created by the Ministry of Business, Innovation and Employment and are available free of charge at www.doyourhomework.co.nz.

Written contracts

Written contracts are mandatory for all residential building work costing $30,000 (including GST) or more. The contract must include certain information; when a written contract doesn’t exist, or where the contract doesn’t cover required content, there are default clauses that will be considered part of the contract. Take time to make sure the contract is suitable for the building work you are undertaking. It is especially important to check the scope of works included in the contract, as this is all your contractor has to carry out. Always get legal advice before you sign a contract.

Once building work is complete

The contractor must also provide the following information and documents once the building work is completed, regardless of the price of the work;

  • A copy of any current insurance policy they hold for the completed work;

  • A copy of any guarantees or warranties including information on how to make a claim and if it must be signed and returned;

  • Information about maintenance requirements; particularly those that are required to meet requirements of the building code.

Implied warranties

From 1 January 2015, there is a new defect repair period of 12 months from the date your building work is complete. If you tell contractors about any defective work before the 12 months are up, they must put it right within a reasonable timeframe from receiving written notification. It is the contractors’ responsibility to prove that any defects are through no fault of their own (or their product) if there is a dispute. The 12 month period begins when all the physical building work agreed to by you and the contractor has been finished.

Implied warranties in the Building Act 2004 apply for up to 10 years, so the contractor is still obliged to fix defective work after the defect repair period ends. The only difference is that it becomes your responsibility to prove that there is a defect if the contractor does not agree the work is defective.

Implied warranties cover almost all aspects of building work, from compliance with the Building Code to good workmanship and timely completion of building work. A breach of these warranties is a breach of your contract.

There are new ways to take action when the warranties have not been met. These are in addition to any legal action taken against your contractor for a breach of contract. If you think your contractor has breached these warranties, your first step should be to begin the dispute resolution process outlined in your written contract.

For more information, go to www.doyourhomework.co.nz.