Fines looming for contractors

Property

Are you complying with the new consumer protection laws for residential building work?

What’s new?

The new Building (Residential Consumer Rights and Remedies) Regulations 2014 and the new Part 4A of the Building Amendment Act 2013 came into force on 1 January 2015 and mean that a written building contract is required for any residential building work valued at $30,000.00 (including GST) or more. The regulations also create a number of mandatory terms and minimum ‘pre-contract disclosures’ for any residential building work above the $30,000.00 threshold. The new regulations are backed up by fines which could cost contractors a minimum of $500 per offence but up $20,000 in some circumstances.

Who is affected?

The new laws affect all contractors who carry out residential building work (construction, alteration, demolition or removal of a building). A contractor is any person or business who is contracted directly by the homeowner client to do residential building work, but does not include subcontractor agreements or design work. ‘Building work’ covers many different trades and is any work for, or in connection, with a residential building or other residential structures not occupied by people (such as retaining walls and fences).

What are the new requirements for a contractor?

A residential building contractor is now required to provide specific information to a client pre and post contract. A contractor is also responsible for ensuring that the parties enter into a written contract which includes the prescribed mandatory terms. This means that a contractor needs to provide the following documents for every project:

  1. Disclosure contractor information and checklist: the contractor information includes certain details about the building company, the main contact person and the warranties to be provided;

  2. Form of written contract: a written contract containing the mandatory terms, such as building timeframes, the process for variations, payment and dispute resolution as well as a 1 year minimum defects warranty period, responsibility for obtaining consents and subcontractor responsibility; and

  3. Post completion: information and documentation in relation to the completion of the works which includes a copy of the relevant insurance policy, guarantees or warranties for services, materials or products and maintenance information.

What you can do:

Contact the team at Cavell Leitch, we will discuss your needs and can provide you with a tailored contract which can be used for all your clients at a one-off cost. The agreement will ensure you are meeting your responsibilities under the new laws but also provides you the appropriate protection as the contractor. We will also talk about how you can establish processes and policies within your company to ensure proper disclosure and provision of information as required under the new laws.

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Copyright © Cavell Leitch. All rights reserved. Redistribution is only permitted with express written permission. For enquiries please contact us. This article by its nature cannot be comprehensive and cannot be relied on by clients as advice. It is provided to assist clients to identify legal issues on which they should seek legal advice. Please consult the professional staff of Cavell Leitch for advice specific to your situation.