123: Residential Consumer Rights and Remedies

Part 4A of the Building Act 2004 and the Building (Residential Consumer Rights and Remedies) Regulations 2014 requires certain documentation to be provided when undertaking residential building projects worth $30,000 or above. This figure is referred to in the Building Act as the prescribed minimum price, which includes GST. 

The documents that must be provided are:

• Disclosure information
• Prescribed checklist
• A residential building contract, and
• Information and documentation to be supplied on completion of the building work

Disclosure information

This statement provides the client with information about the building contractor to allow them to make an informed choice around who will carry out the work on their property. 

This information must be disclosed to the client before the contractor and the client enter into a residential building contract: 

• Information about the building contractor.
• Details of the key contact person on site.
• Details of relevant insurance policies that the building contractor has, for example contract works, professional indemnity, public liability, and plant and vehicle.
• Information about any guarantees or warranties.

The disclosure and checklist forms may not contain any differences from the forms that are prescribed in Schedules 1 and 2 in these regulations. The Prescribed Checklist and a Disclosure Statement template are available on the building.govt.nz website.

Prescribed checklist

This checklist is Schedule 2 of the Regulations. The contractor must not change anything on the checklist or add business logos or contact details. The checklist is to inform the client about:

• the work they are about to undertake
• the project structure and management
• hiring competent building contractors
• pricing and payments
• contracts
• communication with the contractor or their agent
• dealing with disputes as they arise.

The checklist is provided to the client at the same time as the disclosure information, to give the client the ability to make an informed decision before the signing of a residential building contract

The residential building contract

A residential contract, where the contract is for not less than the prescribed minimum price, must provide at least the following details:

• Names and details of the parties to the contract and the date it was signed.
• The site address, description of the building work, and the expected start/finish dates.
• The contract price, or method by which it will be calculated (for example, fixed hourly rate).
• Payments, and how they are to be invoiced, made, and receipted.
• How notices are to be given and mechanisms for negotiating and agreeing on variations.
• How delays will be dealt with, and how any building defects will be remedied.
• Dispute resolution procedures.
• Acknowledgement that the contractor supplied, and the client has received the disclosure documents and the checklist.

These requirements would change slightly if the building work is the manufacture of a modular component.

NOTE: Disclosure information, the checklist, and a residential building contract must also be provided for any building work, regardless of the contract value, if the client requests it. 

These documents are for the protection of both the client and the contractor. It makes good sense for the contractor to provide the checklist and disclosure statement and have a contract for building work that is less than the prescribed minimum price.

Information and documentation to be supplied on completion of building work

Once building work has been completed, the contractor must provide certain information or documents related to the building work. These include ongoing maintenance requirements, guarantees or warranties, and any ongoing insurance policies held in relation to the building work.

Part 4A of the Building Act

Part 4A of the Building Act is concerned with Consumer rights and remedies in relation to residential building work. As well as providing for the requirements under the Regulations, it also covers such things as the:

• Fair Trading Act 1986
• Consumer Guarantees Act 1993
• implied warranties
• remedies for breaches of implied warranties, and
• remediation of building defects.

The LBP Code of Ethics

The Code of Ethics was introduced in October 2021 and came into force on 25 October 2022 following a transition period to allow practitioners to become familiar with their new obligations. Although the Board has been taking an educative approach to its enforcement, the requirement for disclosure, checklists, and contracts has been in place since 2014. Practitioners should now be well aware of these requirements and be complying with them.

Clause 10 of the Code of Ethics, ‘You must comply with the law’, specifically lists the Building Act 2004 and the Building (Residential Consumer Rights and Remedies) Regulations 2014, among other Acts and any relevant legislation made under those Acts.

The Board decision referred to at the top of this article resulted in a fine of $1500 for breaching clause 10 of the Code of Ethics, and costs of $1500 towards the cost of the Board inquiry. The respondent did not provide a disclosure information, checklist, or have a contract for work that exceeded the prescribed minimum price.

Building (Code of Ethics for Licensed Building Practitioners) Order 2021(external link) — New Zealand Legislation

Quiz

1. What is the prescribed minimum price of work at which a residential building contract will be required?
   1. $30,000 plus GST
   2. $30,000 including GST
   3. $20,000 including GST
2. What documentation must be provided to the client before a residential building contract is signed for building of work not less than the prescribed minimum price?
   1. Disclosure information
   2. The prescribed checklist
   3. Ongoing maintenance requirements, guarantees or warranties, and any ongoing insurance policies
   4. Only b and c
   5. Only a and b
3. What documentation needs to be provided to the client when the building work has been completed?
   1. Ongoing maintenance requirements
   2. Guarantees or warranties
   3. Any ongoing insurance policies held in relation to the building work
   4. All the above
4. Is an LBP accountable to the Building Practitioners Board for consumer rights and remedies breaches
   1. Yes, under the Code of Ethics
   2. No, it is not restricted building work