Changes to Building Act

The latest review of the Building Act 2004 has brought some significant changes for builders and their customers. The changes (which came into effect on 1 January) form part of a wider push to improve building standards and consumer protection. Here is a summary of the key points.

There are now four documents that all builders will have to provide where the value of the work is greater than $30,000 (incl. GST and work carried out by sub-contractors), and where their customer is the home owner.

1. A written building contract signed by the builder and their customer. That must include information such as the start and expected completion dates, how variations are to be treated, progress payment details, the hours of site access, who is responsible for obtaining consents and identifying underground services, ownership of demolished materials, and so on.

2.  A checklist, which according to the Act “... is to provide guidance to a client on the matters that a client should take into consideration when entering into a residential building contract, and… may include (but is not limited to) the following:

  • an explanation of the legal obligations of both the client and the building contractor in relation to the building work:
  • an outline of the risks associated with payment in advance of completion of the building work:
  • a summary of dispute resolution options.”

3. A disclosure statement with details of the builder’s skills, qualifications, and licensing status. According to the Act the disclosure statement may include…

  • “the legal status of the building contractor, for example, whether the building contractor is an individual, a partnership, or a limited liability company:
  • the dispute history of the building contractor:
  • the skills, qualifications, and licensing status of the building practitioners who will be doing the building work:
  • if the building contractor is a limited liability company, the role of each director and the business history of each director.”

4. Details of the guarantees and warranties that apply to their materials and workmanship, and the insurance policies and maintenance requirements that the builder must provide on completion of the work.

The implied warranties for building work are specified in the Act. They key ones are:

  • That the work will be carried out in a proper and competent manner and in accordance with the plans and specifications set out in the contract.
  • That all materials to be supplied be fit for purpose and new (not used unless stated in the contract).
  • That the work will be completed by the date specified in the contract or within a reasonable time if no completion date is stated.

The changes now require an automatic 12-month “defect repair period” during which time the builder must fix any defective work (unless they can prove it was not their fault – the kids crashing their trike through a gib wall would not be covered!).

After the first 12 months it will be up to the homeowner to prove the defect before the contractor is required to fix it.

These four documents must not only be provided to the homeowner but also to the local consenting authority. The Act states this is “to ensure that the owner and future owners of the building have knowledge of who carried out the building work and access to information or knowledge about the ongoing maintenance requirements of the building…” In other words, the paperwork becomes part of the property file held by council and available for inspection.

These changes come on the back of builder registration and a drive by central government to increase the standard of workmanship within the building industry. No doubt there will be lots of issues that arise – especially where builders rely on products that later (sometimes much later) prove to be faulty. However, the new 12 month warranty will make it much more difficult for a builder to wash their hands of any problems once they have finished the job.

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