If you’re a homeowner doing residential building work that will cost $30,000 or more (including GST), you must have a written contract with your building contractor.
Understand the information you should get from your contractor before you build or renovate.
is is recommended that you have written contracts with everyone involved in your building work that you are paying directly. Even if the work costs less than $30,000, it’s a good idea to always have a written contract so that you are legally protected and know what you’re paying for.
Each person you have a contract with must give you a checklist and disclosure statement if the work meets the $30,000 threshold or you ask for this information. They must give it to you before you sign the contract and can be fined for not doing so.
If your main contractor is not arranging subcontractors, you will need to have a contract with any other contractors you employ for your project, such as plasterers or painters, if their work meets the $30,000 threshold.
Design work is not considered building work in relation to the $30,000 threshold, but you should have a contract with your design professional anyway, as this can be a significant cost.
You can read about building work and residential building contracts (section 362B of the Building Act) on the New Zealand Legislation website.
A written contract protects you and sets out both parties’ rights and obligations. It should help ensure the work is done according to your expectations and key matters are agreed before the work begins. Verbal and handshake agreements are also legally enforceable but there can be less certainty about what has been agreed.
A written contract is good for:
Your rights and obligations has information for homeowners and building professionals about quotes, contracts, implied warranties and how to identify defects.
Most contractors will have their own form of contract which they adjust to your project's specifications. You never have to accept a contract straight away. You can negotiate and discuss any changes you would like.
It is recommended that you get a lawyer to look over the document before you sign it.
Contracts for your building project will help you understand what to put in each contract document.
This Standard is a 'plain English' standard building contract for use by property owners who want to engage someone to build their house or to undertake alterations or other building work of a simple nature. It is intended to be fair and clearly understood and sets out the rights and responsibilities for all parties.
There are three different types of contracts you can have with your builder. They are:
The payment terms and schedule are different in each contract. You can also arrange your own payment schedule with your builder. Ensure you include this in the contract you sign.
You may pay your main contractor or other tradespeople hourly, weekly, or for a fixed or set price. Make sure you understand and confirm the payment schedule in your contracts.
If your contract does not set out a payment schedule, the default provisions set out in the Building Act apply:
The builder becomes the 'main contractor' under a full contract, and project manages the whole building process. They may take care of:
Under a full contract, the builder is responsible for the quality of their own work and their subcontractors' work. You are able to work with the builder to make decisions that may arise during the build.
You are responsible for project managing the whole building process yourself if you have labour-only contracts with the tradespeople you hire. The tradespeople will only be responsible for the trade you have hired them to complete.
Unless you have arranged for your designer to take on a project management role, you may be responsible for:
Make sure the role of each tradesperson is clearly defined in any written contracts you may have with them. Each tradesperson you hire is still obligated to produce quality work.
If you fail to organise the building process, such as hiring subcontractors, buying materials and arranging building inspections, then each tradesperson may be held up. This can cost you and your tradespeople in the long run.
A managed labour-only contract means the builder takes care of the day-to-day management of the build. You can arrange for them to have additional responsibilities if they agree to it.
You or your builder may be responsible for:
You need to communicate about the roles you will each take on to avoid delays or failing to complete crucial stages of the building process.
Make sure you document each of your roles and responsibilities in the contract to avoid crucial stages of the build not being completed.
You do not need to have contracts with your builder's subcontractors, but their names should be listed in the contract with your builder.
Generally, once you've signed a contract or accepted a quote, you can't change or cancel it. In some circumstances, and with the other party's agreement, you might be able to.
If you decide to cancel the contract without your contractor's agreement, or you don't keep to the terms, you could be in breach of contract. This means the other party can take legal action against you.
If your contractor isn't keeping to the terms of the contract, raise it with them in writing, then follow the steps outlined in the contract for disputes.
