New obligations for residential contractors | Pitt & Moore, Lawyers in Nelson
New obligations for residential contractors
Whether it’s renovations to existing homes or building new ones, if you or your business is involved in building work in the residential area, you need to make sure you comply with new Regulations that came in at the start of the year. From 1 January, The Building (Residential Consumer Rights and Remedies) Regulations 2014 came into force. The Regulations are designed to increase existing consumer protection measures contained in the Building Act 2004 and impose new obligations on contractors carrying out residential building work.
Scope of the Regulations – who is affected?
The Regulations apply to all contractors contracted directly by homeowners carrying out residential building work, which includes construction, alteration, demolition, or removal of buildings. While the Regulations do not apply to subcontractors or those carrying out design work, a multitude of trades are covered by the Regulations. What are the new requirements? Contractors are now required to provide a checklist and certain disclosure information before the contractor and the homeowner enter into a residential building contract if either:
- The homeowner requires it; or
- The residential building work is of $30,000.00 (including GST) or over.
The disclosure information will contain details of the contractor, details of a key contact person, insurance held by the contractor and any warranties offered by the contractor. Where the cost of the work is of $30,000.00 (including GST) or over, a written contract must be provided which shall include mandatory information such as the contract price, anticipated start and completion dates, details of how the contract price will be paid and invoiced, mechanisms for negotiating variations, how possible delays will be dealt with, how any defects will be remedied and how disputes will be resolved. Where no contract is provided despite the regulatory requirement, the Regulations provide that certain terms will be implied.
- Upon completion of the works, the contractor must provide details of the following to the homeowner:
- Every current policy of insurance that applies to the works;
- Guarantees or warranties that apply to materials or services that comprise the building work;
- Information about the processes and materials that must be used to maintain elements of the building work.
Infringement fees (not exceeding $2,000.00) may be imposed where the information and disclosure obligations contained in the Regulations are not met. It does therefore pay to double check you have your new processes in place to avoid sanctions.
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Disclaimer: This article should not be used as a substitute for legal advice tailored for your specific circumstances.