Articles: Commercial and Corporate Articles
The impact of the Building Act 2004 amendment by Ada Xie
The recent amendment to the Building Act has given consumers more protection in the area of residential building work carried out by a building contractor where the price of the work is $30,000.00 (inclusive of GST) or more. Disclosure obligations are imposed and a written contract is now required.
This law change not only enables consumers to know more about the building contractor to make a more informed decision before the engagement, but also provides consumers with future assurance of the building work by way of imposing mandatory post-completion disclosure obligations on the building contractor.
It is now mandatory for building contractors to make certain pre-contract disclosures which provide information to consumers regarding the contractor’s business and the skill and qualification of any identified key people who will be involved in the building work. Information about the relevant insurance policies carried by the contractor and the guarantees or warranties it provides in connection with the building work must also be given. Lastly, a checklist on matters and risks consumers should consider is required to be provided to consumers as well.
The building contractor is required to provide certain post completion disclosures providing information, including the process and materials for ongoing maintenance of the building work, copies of every insurance policy that the contractor holds in relation to the building work and copies of guarantees or warranties that apply to the building.
Another important feature of this law change is to require that the building contract is in writing, dated and includes the minimum content prescribed by the Act, failing which the contract is deemed to include the default mandatory warranty clauses summarized as the following:
- All materials supplied will be new (unless otherwise stated) and will be suitable for the purpose for which they will be used;
- The building work will be carried out in a proper and competent manner and in accordance with the plans, specifications and the relevant building consent and will also comply with laws and legal requirements;
- The building work will be carried out with reasonable care and skill and will be completed by the date specified in the contract or, if there is no date specified, within a reasonable time;
- The household unit will be suitable for occupation on completion of the building work;
- There will be a 12 month implied warranty period to remedy any defect in the work (capable of remedy) for a household unit building contract.
This law change has created the need for the building contractors to check and update their existing disclosure documents and building contracts and in some cases implement new disclosure documents and contracts.
If you are a consumer and want to know about your rights afforded by the law change or you are a building contractor and want to know about your legal obligations and the consequences of non-compliance, please do not hesitate to contact us.
We have prepared this guide to and for our clients. It is not a substitute for detailed advice as every individual situation differs, and also government policies, laws and general conditions constantly change. We are happy to assist anyone who wishes to obtain more detailed advice or information on these or other matters.
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