Home truths
Jason Bywater-Lutman and Thomas Refoy-Butler from Mackenzie Elvin Law
explain the legal considerations around home renos.
Interview Nicky Adams Photos supplied
Q: I’m thinking about renovations to my property. What are the risk areas I should be aware of?
Renovating your home can be both exciting and terrifying. What you don’t need is the added stress of legalities when things go wrong. Read on to find out about new home building laws and how to navigate and prevent problems with future renos.
JASON: Construction can be seen as scary, but there are lots of standard form contracts available, including a basic construction contract released by NZ Standards. The first step is to talk to your builder, get the plans and a quote, then come and see a solicitor to talk through the contract.
THOMAS: It doesn’t have to be a substantial engagement; we can just highlight some of the risk areas, which will give you peace of mind.
JASON: Standard contracts published by the government are designed to make sure the builder gets paid regularly. You need to be conscious that the builder is entitled to get paid regardless of how bad the job.
THOMAS: The onus has shifted on to the homeowner to articulate the grounds on which they’re not prepared to pay for work they’re not happy with. If that’s not communicated in the right way, the payment plan is deemed valid and enforceable as a debt due.
JASON: If a problem arises with the build, then a ‘handshake deal’ that it will be fixed doesn’t cut it under the construction contracts act. When you haven’t got it in writing, in accordance with the act, then you’re not able to withhold payment. And if you’re spending more than $30,000 on renovations, the contract is required to be in writing, so you should be getting that before paying any money over.
THOMAS: At the conceptual phase, when you’re looking at plans and engaging with a designer, talk to your builder about your wish list – if you can find a circle pairing between designer and builder, that’s key. When they can work harmoniously, the job runs in a far more streamlined, cost-effective manner.
JASON: Focus on quality communication – if changes crop up, the best thing for a builder is to have the conversation with the client and reduce it to writing so it’s understood that there’s a variation from the fixed price contract. It’s important to communicate effectively. The builder should confirm in writing to the client, and record site meetings. Keep a record so there is a nice contemporaneous note of the meeting to provide to the client. Ninety percent of legal problems are caused by poor communication. If people know what to expect, they’re going to be happy to pay.
THOMAS: Considerations for a renovation are understanding the difference between a labour-only contract and a fixed-price contract, as well as what a prime cost sum is – and a provisional cost sum. Remember that price variations may arise. Also clarify who has responsibility for insuring the work? There is an obligation on the homeowner for renovations under $100,000 to have a contract works insurance policy (your house and contents insurance won’t cover this). When over $100,000 it’s generally the responsibility of the builder.
JASON: The builder does want to do a good job. It’s about the client having reasonable expectations and the builder communicating clearly with clients so they understand what they’re getting into.