The Building Amendment Act 2013, which was passed some time ago, has bought with it a raft of new rules, largely around building consents.  The introduction of the other key facet of the Building Act’s overhaul – new consumer protection measures – was delayed to allow time for the supporting regulations to be finalised.  That these regulations were released in December wasn’t a surprise – but the liquid lightning enforcement date certainly was. January 1, 2015.

To all you building trade businesses out there, and to anyone about to organise the construction, or major renovation, of their home, you read right.  These regulations are already in force, so any new contracts must reflect them.  No longer can a major building project be agreed on a hearty handshake or the exchange of a few emails; all residential building work over $30,000 – and that’s including GST – must now be outlined in a written contract.  What’s more, the contract must include specific clauses – or “minimum content” – to reflect the boosted consumer protections.  If trades people don’t have their house in order and provide a written contract, they risk copping a $500 infringement fee.  Where there is either no contract, or it doesn’t include the requisite minimum content, then there are new default clauses, which will be automatically deemed as part of the contract.  In our experience, some trades people have either no contract template, one from an industry body – like Master Builders or Certified Builders– or have drafted their own.  If, however, the value of the work is under the threshold, or you are a sub-contractor and don’t have direct dealings with the client, there’s no legal requirement for a contract – unless one is specifically requested.  Other than the value threshold, there really is no longer an opt-out clause on this one.  If you’re in the building game, you must now have a proper standard contract that’s in keeping with the new regulations.  A quick call to EC Credit Control or your industry association will give you an indication as to what if any work’s needed to ensure compliance.  In tandem with these new obligations, main contractors are now also required to provide their clients further supporting documentation at the outset, including a prescribed checklist and disclosure statement.  To that end, the Ministry of Business, Industry and Employment has drawn up templates that are available online.  A building contract supplied by EC Credit Control will include these documents.

Importantly, as part of the disclosure requirements, you’ll also have to state the type of insurances you carry, highlighting the amount of cover and any exclusions.  The changes also increase your accountability, too, around product guarantees and warranties.  Both the checklist and disclosure statement need to be completed and authorised before the contract is signed.  If you knowingly falsify or omit information, the fine could be up to $20,000.  Another important change is around implied warranties that apply to all residential building work for up to a decade, covering almost every aspect of building work.  A new, set “defect repair period” is also now in force, meaning for 12 months after the work’s completion, the main contractor is compelled to remedy any problems.  Should there be a dispute over whether the issue constitutes a defect, the onus falls on the contractor to disprove the client’s claim – that is until the 12 months is up, when the burden of proof switches to the homeowner.  Come the end of the project, as main contractor, you are expected to provide your client a copy of the current insurance policy for the work completed under contract, as well as copies of all products and services’ warranties and guarantees.  Note, here, you’re obliged to furnish information on how to make a claim and to also flag which ones need to be signed and returned to the insurer.  You will have to collate and provide supplier information so your client is fully schooled up on the maintenance and upkeep required on the build, particularly if it’s likely to affect the requirements of the Building Code or any guarantee or warranty.