Building Warranties & Guarantees
To protect your investment you need ensure you look after it. Before you started your new build or alteration journey you will hopefully have put some measures in place to protect yourself in the form of warranties and guarantees (refer information planning your build).
Should anything not be quite right you do have a number of avenues available to you under the following legislation
- New Zealand Building Act - includes implied warranties
- Construction Contracts Act - details how to make a claim covered by the implied warranties and how to resolve problems
- Consumers Guarantee Act - applies to services only (not materials or the building - this is covered by the NZ Building Act)
- Fair Trading Act - protects the consumer from misleading claims about products and services.
Building owners' responsibilities and obligations
As the owner of the building it’s your responsibility to obtain all necessary consents and a code compliance certificate at the completion of the build.
A common misconception is that a code compliance certificate is a guarantee from council.
This is a myth - the code compliance certificate confirms your building has been constructed to the consented plans and specifications, and complies with the New Zealand building code.
A code compliance certificate will often be required when you sell your home or building. Not obtaining it immediately after the build has been completed may
- slow the sales process while you wait for documentation, and
- result in further inspections needed and costs for these.
Keep details of any warranties and guarantees provided by the building contractor. Have a look at these documents to see what ongoing maintenance obligations you have to keep your warranties and guarantees valid.
This information can also be helpful for selling your building in the future. You’ll want to obtain these documents before making final payment to your contractor - this ensures that you receive them.
Building contractor responsibilities and obligations
Tradespeople are required to complete the agreed work with reasonable skill and competence, and repair any work that isn’t completed to an acceptable standard at no extra cost.
If work is not remedied by the original tradesperson within a reasonable time frame you can get another tradesperson to complete the repairs and forward the costs to the original tradesperson for reimbursement.
Implied warranty for household units
An ‘implied warranty’ applies to all residential dwelling building work within New Zealand for ten years from project completion - whether it’s stated in your contract or not.
Contractors need to carry out work
- in a proper and competent manner,
- with reasonable care and skill,
- to the agreed plans and specifications of your contract,
- with agreed materials that are fit for that purpose, and
- in keeping with the granted building consent.
A clause cannot be written in your building contract to exclude this implied warranty - it is valid regardless of the size or cost of your project.
The ten year implied warranty covers work by the main contractor and their subcontractors. It can be transferred to subsequent owners of the property within the ten year period.
Seek legal advice if there is a dispute over repair work, as you will need to present your case with supporting evidence in the District or High Court. To make a claim for compensation you will need to prove how you have suffered loss or damages as a result of the actions by the tradesperson.
Building Act - 12 month defect period
It is important to have agreement by all parties confirmed in writing on the project completion date. If any defective work appears within the 12 months immediately following completion you must let the contractor know in writing. The contractor is then required to remedy the defect under the Building Act.
If there is a dispute over the defect it is the contractors’ responsibility to prove they (or their product) is not at fault.
The contractor is not liable for any damage caused by
- you not carrying out normal maintenance
- accidental damage caused by someone other than the main contractor or their subcontractors
- events beyond their control (ie natural disaster).
Third party guarantee
A third party guarantee can offer additional protection and peace of mind for you. They are available at a cost through independent parties, which include among others, Master Builders and Certified Builders.
These types of guarantees cover
- non-structural defects within the first two years of the build completion,
- refund lost deposits, and
- additional costs required to complete your building work if your builder ceases to trade.
Guarantees like these can also be very valuable if you plan to sell your home within the timeframe covered, with the guarantee usually able to be transferred to subsequent owners for a fee.