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Building Regulation Amendments from 1 January 2015

Consumer Rights in Residential Building Contracts

From 1 January 2015, owners engaging a building contractor to construct, alter, demolish or remove a residential dwelling from an allotment will be entitled to a number of protections under the Building Amendment Act 2013 and the Building (Residential Consumer Rights and Remedies) Regulations 2014.

Briefly, the protections fall into one of the following categories:-

1. Disclosure of information before a residential building contract is entered into;
2. Minimum contractual conditions;
3. Implied warranties;
4. Remedies for breaches of implied warranties;
5. Remedy of defective building work; and
6. Provision of certain information and documents to the owner upon completion of the building works.

Pre-Contractual Disclosure

If the building work is equal to or greater than $30,000 including GST, then the building contractor must provide:-

1. a checklist in the form prescribed by schedule 2 Building (Residential Consumer Rights and Remedies) Regulations 2014; and
2. a disclosure information statement in the form prescribed by schedule 1 of the same regulations.

The building contractor must also provide those documents if the owner asks the building contractor to provide them, regardless of the cost of the building works.

The checklist and information disclosure statement provided by the building contractor must comply, word-for-word, with the forms set out in the regulations.

Residential Building Contract, Written and Verbal, Implied Warranties and Conditions

If the building work is equal to or greater than $30,000 including GST and the agreement is in writing, then the Building (Residential Consumer Rights and Remedies) Regulations 2014 sets out the terms that must be contained in the written agreement. This terms may not be contracted out of but the parties may come to different terms on the same matters.

However, implied into every residential building contract are warranties that:-

1. the building work will be carried out in a proper and competent manner, in accordance with the plans and specifications set out in the contract, and in accordance with the relevant building consent;
2. all materials supplied for use in the building work will be suitable for the purpose for which they will be used and will be new unless agreed to otherwise by the parties;
3. the building work will be carried out in accordance with and comply with all laws and legal requirements;
4. the building work will be carried out with reasonable care and skill and completed by the date agreed or if no agreement, within a reasonable time;
5. that the residential dwelling will be suitable for occupation on completion of that building work if it is to be occupied upon completion; and
6. if there is a particular purpose for which the building work is required or result to be achieved, the building work and any materials used in carrying out the building work will be reasonably fit for that purpose or of such a nature and quality that they might reasonably be expected to achieve that result.

Remedies for Breach of Implied Warranties and Defective Building Works

If the building contractor breaches a warranty implied into the agreement by legislation then the owner may ask that the breach be remedied and that remedial works be undertaken within a reasonable period of time.

Only if the building contractor refuses, or fails to, remedy the breach within a reasonable time may the owner engage another contractor to remedy the breach and seek recovery from the building contractor all reasonable costs incurred in having the breach remedied, or cancel the contract.

If the breach cannot be remedied, then the owner may claim compensation or cancel the contract.

If the work performed by the building contractor is defective and that defect can be remedied, then the owner may give notice within 12 months from completion of the building work to the building contractor requiring that they remedy the defect.

The defect must be remedied within a reasonable time of receiving notice.

Provision of Information and Documents upon Completion of the Building Works

As soon as practical after completing the building work the builder must provide in writing to the owner and to the local authority the following:-

1. Copy of every policy of insurance the building contractor holds in relation to the building work and that is current upon completion;
2. Copy of any guarantees or warranties that apply to the materials or services comprised in the building work, including whether the guarantee / warranty is transferable, how to make claims under the guarantee / warranty and whether they need to be signed and returned to the issuer before they are valid;
3. Information about the processes and materials that must be used to maintain elements of the building work, if maintenance is required to meet the durability requirements of the building code or the validity of any applicable guarantee or warranty could be affected by how and whether maintenance is carried out.

Upon entering a building agreement then the owner is entering a commercial contract and that obtaining legal advice prior to signing same is advised.

• Posted By: Tristram Lock on Mon, 15th Dec 2014 @ 11:16:02

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