6.04.2018

New Residential Building Regulations

The Building (Residential Consumer Rights and Remedies) Regulations 2014 (the Regulations) are coming into force on 1 January 2015.  These implement a number of new consumer protection measures for residential building work.

Scope

A “residential building contract” will involve a contract between a “building contractor” (which include builders, plumbers, electricians, or any other tradesperson (whether as a sole trader, partnership, or a company)) and the client to do building work in relation to a household unit.  It does not include a subcontract agreement between a building contractor and a building subcontractor.

Pre-Contract Information

Building contractors will be required to (a) provide checklists and (b) disclose certain prescribed disclosure information before the client signs a contract for the building work if:

  • The owner requests the checklist and the prescribed disclosure information; or
  • The building work is going to cost $30,000 or more (including GST).

A standard-form checklist can be found here.

The prescribed disclosure information referred to above includes:

  • Information about the building contractor (i.e. name, type of business (individual/partnership/company), the date the partnership/company was formed, postal address, telephone number, and email address)
  • A key contact person (the person who will manage or supervise the building work and who is available to the client to discuss any aspect of the building project), and their contact details, and qualifications.
  • Details of every insurance policy that the building contractor has, or intends to obtain, in relation to the building work, including the amount of cover and any relevant exclusions.
  • Information about any guarantees or warranties the building contractor offers in relation to the building work.

An example can be found here.

The Contract

Every residential building contract that is going to cost $30,000 or more (including GST) must be in writing.

There will be minimum content for every residential building contract that is going to cost $30,000 or more (including GST).  A full list can be found here but, in summary, includes the names of the parties, the expected start and completion dates, the contract price, the number of payments and how those will be invoiced and paid, mechanisms for negotiating and agreeing variations, how delays will be dealt with, how defects will be remedies, and dispute resolution procedures.

If there is no written residential building contract or the written contract does not include the minimum content (see above), then there are default clauses implied into the contract, as set out here. Note, however, that the default clauses only apply if the written contract is silent/there is no written contract – i.e. the default clauses won’t override an existing clause in the written contract on a similar topic.

There will be implied warranties that apply to all residential building work for up to 10 years, regardless of what the contract terms are.  These will cover almost all aspects of building work from compliance with the Building Code to good workmanship and timely completion.  A breach of these terms is a breach of the contract.  The full list of implied warranties are listed at section 362I of the Building Act 2004, which can be found here.

Post-Contract

As soon as practicable after completion of the building work, the building contractor must provide:

  • A copy of every insurance policy that the building contractor holds in relation to the building work and that is current on completion;
  • A copy of any guarantees or warranties that apply
  • Information about the processes and materials that must be used to maintain elements of the building work if (a) maintenance is required to meet the durability requirements of the building code; or (b) the validity of any guarantee or warranty could be affected by how and whether maintenance is carried out.

The defect repair period is 12 months from the date the building work is complete.

Penalties

Where the building contractor fails to (a) provide prescribed disclosure information; or (b) provide the prescribed checklist; or (c) have a written contract, then they are liable to an infringement fee not exceeding $2,000.

Where an implied warranty has been breached, the penalty will depend upon whether the breach can be remedied or not:

  • If it can be remedied, the client may (a) have it remedied by someone else and recover from the building contractor all reasonable costs incurred in having the breach remedied; or (b) cancel the contract.
  • If it cannot be remedied, then the client may (a) seek damages as compensation for any reduction in value of the product of the building work below the price paid/payable; or (b) cancel the contract.  In these circumstances, the client may also seek damages for loss or damage resulting from the breach that was reasonably foreseeable as liable to result from the breach.

Next Steps

As noted above, these provisions come into force on 1 January 2015.  From that date onwards, all residential building contracts must comply with the new requirements under the Building Act 2004.

If you would like more information about the Regulations, or have any other construction law questions, please contact the Hesketh Henry Construction Law Team.

 

Do you need expert legal advice?
Contact the expert team at Hesketh Henry.
Kerry_100x100 1
Media contact - Kerry Browne
Please contact Kerry with any media enquiries and with any questions related to marketing or sponsorships on +64 9 375 8747 or via email.

Related Articles / Insights & Opinion

4 million reasons for a tailored Shareholders’ Agreement: Dold v Murphy
The Court of Appeal’s recent decision in Dold v Murphy highlights the importance of having an appropriate Shareholders’ Agreement in place.
21.10.2020 Posted in Business Advice & Company Law
Things to know before starting a lending business in New Zealand
Things to know before starting a lending business in New Zealand
09.10.2020 Posted in Corporate & Commercial law
Hesketh Henry announces new managing partner
We are very pleased to announce the appointment of Christina Bryant as our new managing partner.
09.10.2020
Supreme Court forecast – storms ahead for directors
On 24 September 2020, the Supreme Court released its long-awaited decision in the case of Debut Homes Ltd (In Liquidation) v Cooper [2020] NZSC 100.
Is this Organic? Proposed Regulation of Organic Product Claims
The Organic Products Bill, which is currently at the Select Committee stage, proposes to introduce a regime to regulate claims made by businesses that products are organic (known as making an “organ...
06.10.2020 Posted in Business Advice
Government calls time on Dodds litigation
Southern Response Earthquake Services Limited v Dodds [2020] NZCA 395
Privacy Act 2020: new obligations to report privacy breaches
The Privacy Act 2020 creates a new requirement to report serious privacy breaches, as from 1 December 2020. 
25.09.2020 Posted in Business Advice & Employment Law & Regulatory
Send us an enquiry
For expert legal advice, please complete the form below or call us on (09) 375 8700.
  • This field is for validation purposes and should be left unchanged.
-->