- Legal requirement for all residential building work over $30,000 (inc GST and work undertaken by sub-contractors).
- MBIE are undecided whether they will provide a template.
- MBIE have suggested builders work with their associations and if they don’t belong to one they should use NZS 3902 (Housing, alterations and small buildings contract).
Standards NZ have just released a range of questions and answers on NZ 3902. These are available on their website and explain how to get the most benefit from NZ 3902 and avoid any issues.
Housing, alterations and small buildings contract
Provides a standard form of building contract suitable for owners who are making their own building arrangements. Written in 'plain English', this standard was developed by a committee with a broad and balanced representation of stakeholder interests including regulators, industry, and consumer advocates.
It is intended to be a fair and clearly understood contract that sets out rights and responsibilities for all parties.
The Building Amendment Act 2013 introduced changes to enhance consumer rights and remedies for residential building work, including mandatory requirements for residential building contracts to be in writing and to contain certain information.
Using NZS 3902 will help you give effect to these amendments to the Building Act 2004. The new Contract Agreement in electronic form, used in place of the existing Section 3 form, allows the standard to comply fully with these changes without modification
Residential builders should be aware that ever since 1 January 2015 it has been compulsory to use written building contracts for all residential projects costing $30,000 or more (including GST). The maximum fine for not doing that is $2,000, but it could also reflect badly on you in the event of a dispute with your client, or a complaint to the Building Practitioners Board. Furthermore, if your written building contract does not deal with the various topics listed in the Regulations, then you get the Government-written clauses by default. To avoid that, you don’t just want to be using a written building contract, you want to be using a sophisticated building contract that satisfies the law and says what you want it to say.
If you are a member of the Master Builders Association or the Certified Builders Association then you have access to sophisticated building contracts. If you are not a member of those organisations then your choices are more limited, but there are a variety of options available, some more sophisticated than others. The one recommended by construction lawyer Geoff Hardy of Auckland law firm Martelli Mckegg (who writes the legal articles in this magazine) is the housing, alterations and small buildings contract put out by Standards New Zealand and known as NZS 3902:2004.
However Geoff does not recommend that you use that version without modification. He has written a version customised for builders that is available from Martelli McKegg at a one-off charge of $1,500.00 + GST. This price includes not only the contract terms, but also some guidance on how to fill it out and how it works in practice. If you are interested, contact Geoff on 09 379 0700 or firstname.lastname@example.org. This customised version has been updated since the original was prepared some years ago, so any builders who currently have the earlier version are welcome to contact Geoff to discuss the price of an upgrade.”