Building A New Home, Who Owns The Plans?

20 February, 2020 | Bret Gower

Building a new home is an exciting prospect, although not without its share of stress and uncertainty. Not the least of which, particularly if you are building in Auckland, is the cost associated with building. A particularly tricky issue arises when the new homeowner, having worked closely with one builder to design their dream home, takes those plans and receives a considerably cheaper quote to build that home from another builder.

The question to resolve is “who owns the copyright in the plans?”, whether it is the builder or the new homeowner. Under the Copyright Act 1994, plans are considered an “artistic work” capable of having copyright protection, however, determining who is the owner of the copyright in those “artistic works” will depend heavily on the specific facts.

Building a house from copyrighted plans can be considered to be an act of copying, and potentially a breach of copyright in terms of the Act. Accordingly, each of the three parties has a different issue they must resolve if the new homeowner chooses to build with the second builder. Enforcing or defending a breach of copyright in these circumstances is not a straightforward process and is potentially expensive and time-consuming so it is essential to understand your position if you are one of the parties.

The new homeowner’s position:

The risk for the new homeowner is, having contracted with the first builder to design the plans whether building their new home with the second builder will be a breach of copyright. This will be a question of who is considered to be the owner of the copyright and will depend heavily on the terms of any agreement between the first builder and the new homeowner in relation to the plans. Has a fee been paid? Is there any sort of exclusivity agreement in place regarding use of those plans, or any agreement as to who owns the copyright?

The first builder’s position:

Obviously, every builder would prefer that the new homeowner established a great relationship with them and went ahead and built with them. Realistically, however, this is not possible in all circumstances. Therefore, the first builder needs to ensure they have properly retained the copyright in all plans designed for new clients. This is not as straightforward as printing the © symbol on the drawings, which is simply an indication of a claim to copyright not a guarantee that it is enforceable. Alternatively, they need to ensure they have systems and processes in place, and contracts that reinforce them, to enable them to be reimbursed for the work involved in producing the plans for the clients and the lost opportunity to build the house.

The second builder’s position:

The risk to the second builder is being included as a party in legal action for a breach of copyright – along with the new homeowner, or as the party most likely to be able to pay any damages awarded. This can be avoided by understanding your legal position, and the position of any new client bringing plans to you, so that your agreement with the new client has sufficient indemnities included to mitigate the risk. The better you understand this issue the better you are able to help homeowners and you can take on building those homes secure in your understanding of both the homeowner’s and your own rights.

We have worked with both builders and home owners facing this position and we can help you understand your position, put good building contracts in place and if necessary, help enforce your rights. If you have concerns or would like to have some certainty around this issue please contact our intellectual property and copyright law expert, Bret Gower on 09 837 6893 or email bret.gower@smithpartners.co.nz.