Changes ensure due diligence

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Happy New Year to you all! I hope you are over the festive season and are raring to get back into work.

Some of you may be aware that Building Amendment Act regulations were passed by cabinet on December 1, 2014, and came into effect on January 1, 2015.

Contracts compulsory for work over $30,000

These rules will have a significant impact on how you draft your contracts from now on. For most of you, it will be business as usual, but for those builders working on smaller projects — that is, for any building work over $30,000, it is now compulsory to have a contract in place before commencement of the project.

Builders now have to provide information regarding the legal description of their business — for example, whether you are a partnership or a limited liability company. It is now also a requirement to supply information regarding the key personnel who will manage or supervise the project, as well as insurance details, such as the type of cover you will provide and what type of guarantees and warranties are included.

You will also have to specify the materials and products that will be used (if known), the expected start and completion dates, and detail the payment method — for example, “charge-up”, with fixed hourly rates, materials and margins, or a fixed contract price.

At the end of the contract the main contractor must supply all of the warrantees and guarantees that apply to the project.

The forms are available on the RMBA web site at www.masterbuilder.org.nz, and are quite simple to fill out.

Defects and liability period

One of the biggest changes is the defects and liability period which is now 12 months, so it is very important that any maintenance requirements that affect the durability of any products supplied are detailed to the owner at the end of the job.

Personally, I am very pleased to see this come into force, as it provides protection for builders and home owners. Builders are now required to provide their prospective clients with a checklist for all building work over $30,000, which outlines their due diligence.

It explains the need to get detailed quotes (not estimates) for building work, and the importance of “comparing apples with apples”.

If clients are better informed at the start, and builders have clear expectations of the scope of the project — and both understand the procedures for payments, variations and dispute resolutions — the outcomes should be better for all.

Please take the time to familiarise yourselves with the information in the new RMBA Residential Building Contract — RBC1-2015.

This year, I am trying to meet as many members as I can. In May I will be travelling around the South Island, and I look forward to catching up with you and getting your feedback.