Stronger consumer protection measures in Building Act to roll out Jan. 1, 2015

28 November, 2014 | Peter Smith

From Jan. 1, 2015 new laws regarding consumer protection measures will be coming into effect, according to the NZ’s Ministry of Business, Innovation and Employment’s website.

“These new laws, which are part of the Building Amendment Act 2013, not only increase residential builders’ potential liability but they also increase their paperwork substantially, and for many of them they completely alter the terms on which they contract with their clients,” writes Geoff Hardy, Principal at Madison Hardy Auckland in an article for Auckland District Law Soceity Inc. (ADLSI).

The Building Amendment Act 2013 has been in the works since 2010 as the government underwent a comprehensive review of the Building Act 2004. It was officially passed by parliament on 27 November 2013.

It aimed to introduce new measures to improve “the building and construction sector” to ensure good quality, affordable homes and incentivise building professionals to stand behind their work.

Some changes to the amendment took immediate effect including changes to the type of work that does not require a building consent and changes to a number of terms and definitions. It also meant higher penalties for work without appropriate consent, increasing the maximum penalty charge from $100,000 to $200,000.

As of 2015, the focus will be on rolling out the new consumer protection regulations.

But as Hardy wrote in his article, “I suspect there is a huge percentage of the residential building industry that is overwhelmed with information overload, or a bit shell-shocked by all the recent reforms, and are unaware that this is just around the corner.”

As stated on the ministries’ website, the new regulations include:

• Mandatory written contracts for residential building work over $30,000
• A requirement for building contractors to provide checklists and disclose certain information for residential building work over $30,000
• Details of the minimum content that must be included in residential building contracts
• Details of the clauses that are taken to be included in a residential building contract that does not contain all of the minimum content, or in a contract for work over $30,000 that is not in writing
• Details of the information that a building contractor must provide to the client after the building work is completed
• Infringement fees of $500 for breaching the contract, disclosure or checklist requirements.

Preparing for the changes ahead:

The Ministry is rolling out an educational campaign to support the new regulations coming into effect but with only one month left, builders should take practical steps to get to know their new obligations.The full Building Amendment Act 2013 is now available on the ministry’s website. Hardy also suggests compiling the four key documents builders will now be required to fill out.These four documents include a checklist and disclosure statement to be handed over to potential residential customers, the written building contract which the residential customer is required to sign and “the insurance policies, guarantees and warranties, and maintenance requirements the builder has to tell the customer about at the end of the project.”

The team at Smith & Partners is able to assist you with the preparation of these documents to ensure they fit the Ministry’s standards. Please contact experienced property and commercial lawyer, Peter Smith, for assistance with these upcoming changes at 09 837 6882 or peter.smith@smithpartners.co.nz.

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