Mackenzie Elvin

Building a home? - Important issues to address before signing the contract.

There have been instances in the past where the building contractor has commenced work, obtained a progress payment and then left the site to complete other works due either to other owners’ pressure or cash-flow pressure.

It is important that the payment schedule in the contract does not result in payments getting ahead of work done, and that the balance of work to be done can be met from the outstanding contract price.

This is essential should the builder go into liquidation or fail to complete the work.

There are also issues with timing around the final payment and obtaining of final sign off by Council.

The Building Act 2004 does not allow the occupation of a dwelling until a final Code of Compliance Certificate (CCC) has been issued however it can often take up to a month, or longer, for the local authority to issue a CCC for the property.
For that reason it is a trend in building contracts to contract out of the requirement to provide a Code Compliance Certificate (CCC) from the Local Authority.

We believe the CCC is essential because:

• Without it your ability to on-sell the property is reduced;
• In obtaining a CCC you will also have the peace of mind of having the ‘final sign off’ on the finished building in compliance with the Building Consent;
• Failure to obtain CCC can also be an indication of the failure of the builder to pay sub-contractors which can cause difficulty in securing maintenance and warranty items.

The building contract can be altered to include clauses which:

• Secure CCC before final payment;
• Enable you to inspect the works at any reasonable time, and give such notice of any defects you discover in those inspections;
• Provide a mechanism for you to cancel the contract if for any reason the building contractor fails to get on with the job.

Alterations to the contract must be made before you sign it. If you would like us to review your Building Contract please contact a member of our commercial team to arrange for an appointment.

Michelle Carabine

Oct 2009