Building a Home – Be Prepared & Review Your Building Contract

Building a home is an exciting project but it can also be daunting! One way you can help with peace of mind is getting TODD & WALKER Law to review your building contract. At TODD & WALKER Law, we regularly advise clients on building contracts and we know them inside-out.

Often, we see that the building contract itself is the last thing a builder will provide to a client before the building work commences. While it is great if you have already invested a lot of time in due diligence (for example, obtaining finance, ensuring the builder has a good reputation and can work to the style and design you are after, reviewing the builder’s quote and specifications) even if you feel committed to the process, do not assume you cannot negotiate a building contract or take the necessary time to review and understand it.

Building contracts vary depending on the builder and while there are several “standard form building contracts” - all of these are very different. We recommend that all building contracts are reviewed on a case-by-case basis, as every build should be personalised.

There are many important aspects to turn your mind to when signing a building contract. For instance:

• who is responsible for obtaining building and resource consents?
• how is the build priced (many people are surprised that even contracts called “fixed price contracts” can have the price increased in certain situation – e.g. in the event of the increase in the cost of materials);
• what percentage is recorded as the builder’s margin?
• what is the process for a variation?
• in what circumstances can the builder suspend work?
• what is considered a default by the builder and what can you do in this situation?
• when is the final payment to the builder due?
• is a defects liability period and building guarantee being offered (there are currently five building guarantees in the market) and in-line with the industry norm?

Issues that arise in build disputes are commonly to do with the cost, miscommunication, cost of variations, quality of the finish and what responsibilities each party had during the build. Parties often have opposing views and memories to what has previously been said and done. Ensuring all agreed terms are in writing helps “prepare for the worst, hope for the best”.

There is a lot to digest when building a home and we are of the view that obtaining legal advice is a comparatively small cost when you consider the overall cost of a build project.

If you would like to discuss a building contract, please contact our experienced construction law team. Likewise, if you are a builder and would like help putting together or reviewing your existing contract documentation, we can help with that too. Contact the Construction team on 03 441 2743 or:

Peter Sygrove on [email protected] or call 027 444 9928

Pip Roberts on [email protected] or call 027 391 3752

Gemma Beckman-Cross on [email protected] or call 022 517 2558