Before you build – property law update

Recently building and  property law has changed. There are a number of things you need to know as a building contractor before you undertake building works for your client. Even if you are completing building works as part of an agreement for sale and purchase of real estate, the following will still apply to you:

Before signing the contract

You are now required to give your client a disclosure statement with information about your business along with a standard checklist if either:

  • The building work will cost $30,000 or more (including GST); or
  • The client has asked for these documents.

In the case of bullet point one, you must provide these documents to your client before signing the building contract.

The standard checklist and disclosure statement can be easily downloaded from the Ministry of Business, Innovation and Employment’s website at www.building.govt.nz.

Building contract

It is now mandatory for building contractors to provide their clients with a written contract for residential building work costing $30,000 or more (including GST). However, even if the building work will cost less than $30,000 we suggest that you provide the client with a written contract. Having a written contract can help protect you in case of a payment or quality dispute.

Your contract must include the following:

  • Names, physical and postal addresses of both parties and the relevant contact details;
  • The address or location description of the site where the building work will be carried out;
  • The date(s) the contract has been signed by both parties;
  • The expected start and completion date and how possible delays will be dealt with;
  • The contract price or the method by which the contract price will be calculated;
  • A description of the building work that you will complete including the materials and products to be used (if known);
  • Which party will be responsible for obtaining building consents, and any other approvals required;
  • Who will be carrying out and/or supervising the building work;
  • How notices and certificates will be given by one party to the other;
  • The payment process, including dates or stages for payment and how payments will be invoiced, made and receipted;
  • How defects in the building work will be remedied, including references and application of the implied warranties in the Building Act 2004;
  • The dispute resolution process to be followed if there is a disagreement;
  • How variations to the building work covered by the contract will be agreed before work continues; and
  • An acknowledgement that the client has received the checklist and disclosure statement.

If you do not have a written contract then the new default clauses in the Building (Residential Consumer Rights and Remedies) Regulations 2014 will automatically apply.

Where you have a written contract in place then the terms in your written contract will apply instead of the default clauses. However, if your written contract does not deal with any of the bullet points above then the relevant default clause in the Regulations will apply.  For this reason we recommend that you carefully review your usual building contract to ensure that it adequately covers all of the topics listed above.

For further information please call or email solicitor Richard Doole  at this office.