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Building Q&A - Building contracts

Wednesday, April 05, 2017



APIA Ask An Expert

 

 

I am building a home first time and needed advice on the contracts that builders will sign since I hear that builders hardly ever sign much and that contracts are weak in terms of getting good quality / trustworthy service to completion. Can you tell me if they will sign sundowner clauses, a penalty clause for time and cost overrun? Also, will they agree to receive the last 5% or 10% payment after all Council/ authority approvals are done? 


 

APIA Ask An Expert

 

 

 

Building work over the prescribed minimum price (currently $30,000.00 including GST) requires a contract between the parties in writing. A builder must provide pre-contract disclosure and checklist. The Building (Residential Consumer Rights and Remedies) Regulations 2014 provide default provisions for building work contracts. However, you and the builder can agree that different provisions apply instead.

 

Some building agreements include an expected completion date and a requirement to pay for the builder to pay your reasonable costs if the agreement is not completed. However, many agreements exclude sunset clauses, liquidated damages and penalty provisions and so we recommend that you include these provision if one is not included as well as a clause providing that the builder cannot pass on any increased costs after the agreement becomes unconditional.

 

We strongly recommend that the final 10% of the purchase price should not be payable until the code compliance certificate and any other Council approvals have been obtained.

 

These are only a few of the matters that must be contained in a building agreement, so we strongly recommend that property owners have their building agreement reviewed by a lawyer experienced in building and construction matters before signing.


 

Shaun Peacock

For further information please contact, shaun@dklaw.co.nz

Disclaimer: the content of this article is general in nature and not intended as a substitute for specific professional advice on any matters and should not be relied upon for that purpose.


 

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