We lay out the right way to approach grievances, big and small.
We lay out the right way to approach grievances, big and small.
Whether it’s botched minor alterations or a major failure, there’s a good chance something in your reno will go pear-shaped.
Hopefully, getting a fix will be easy. If not, and you’ve had substandard work done, your options for getting a remedy might depend on the depth of your pockets.
Some defects hit you in the face as soon as you see them. Something might be installed in the wrong place or the work could look shoddy to anyone taking the most casual of glances. Other issues may be under the surface and can take years before you realise there’s a problem.
If you have an untrained eye – as many of us do – there’s a handy resource on what constitutes acceptable building work at building.govt.nz. It has a new-build slant, but you’ll get the gist of what to look for.
It can be tricky to prove some issues when it comes to renos. Someone can claim your floor was always on a lean or the front door never closed properly anyway. However, you’ve got the right to expect that work is done with reasonable skill and care, not slapped together by your builder’s untrained lackey.
When things go wrong with building work, there are two main laws that can help you.
The Consumer Guarantees Act (CGA) requires work done by tradespeople to be carried out with reasonable care and skill. If it’s not, the CGA states you can ask the person who did the job to fix it at no cost to you. If they can’t – or won’t – provide a remedy, then you can employ someone else and claim the cost from the original tradie.
The CGA applies to services provided by the building industry, but not to buildings and building materials – they’re covered by the Building Act.
This act requires tradespeople to provide warranties that work will be done competently using suitable materials. These warranties form part of every contract for residential building work – regardless of whether the contract refers to the warranties or not – and apply for 10 years.
The act also contains a specific 12-month defect repair period. If you find defects within 12 months of the completion date, the builder must fix them or prove they’re not responsible. Any longer than 12 months, the onus is on you to prove the builder was at fault.
Uncovering a problem can feel like a real kick in the guts, especially after forking out so much money to get the job done – and done right.
Before escalating anything, you need to cover the bases at your end. Ask yourself if you’ve been carrying out the required maintenance to keep things in working condition.
If you’ve noticed something faulty, did you arrange for repairs as soon as practicable? If you’ve left a problem to fester for a couple of years, it’s harder to make a claim.
Any defects caused by something beyond anyone’s control – for example, a storm or earthquake – won’t be covered. You’ll need to rely on your insurance. Further to that, if you’ve tripped and put your elbow through the gib, that’s on you.
It’s when it comes to enforcing your rights that things get tricky. You’ll want to get things fixed and, ideally, fixed yesterday.
That said, your best bet is talking it over with your tradesperson and trying to sort the problem yourselves.
This is where relationship building throughout your renovation is key. A nicer client might get a better response.
Hopefully a few emails and calls can sort it out. But if your tradie starts ignoring or blocking your calls you need to act. There are industry bodies that’ll investigate complaints about their members, but many tradespeople don’t belong to these bodies.
So where next?
The Construction Contracts Act has a formal process for adjudicating on building disputes. The act covers all types of construction work – from building a home to altering or decorating one.
If you take this route, a qualified and independent adjudicator looks at the issues and determines what should be done. The process is relatively quick: you should have a binding decision within 25 working days.
However, it can be costly. Parties to the dispute have to pay the adjudicator’s costs. These can vary hugely – from several thousand dollars to tens of thousands – depending on the scale and complexity of the dispute. On top of this, you’ll have to meet any other costs you incur, such as legal fees.
You and the other parties can agree who will act as the adjudicator. If there’s no agreement, there’s a process for having an adjudicator selected – but you may be charged a fee ($400 to $500) for this.
These are other forms of dispute resolution to resolve problems arising under a construction contract. But unlike adjudication, which is a statutory process, you and the tradesperson must agree on using these options and on the mediator/arbitrator.
Mediation is cheaper than arbitration, but will still cost a few thousand dollars. But there’s no guarantee you’ll get a resolution: the mediator’s role is to facilitate discussion, not make a ruling. You’ll get a binding decision from arbitration but you’ll also pay more: arbitration can cost tens of thousands of dollars.
If you go for mediation, know that both parties must reach an agreement. That might mean you have to give ground on an issue, even if you feel or know you’re in the right. That can be a bitter pill to swallow.
Mediation: cheapest, both need to agree to it, facilitation, not a binding decision.
Arbitration: more expensive, both need to agree to it, binding decision.
Adjudication: top dollar, one party can instigate it, binding decision.
The Disputes Tribunal is an option for relatively minor matters. As soon as the issue gets complicated or technical, you’ll need to pay for expert advice to support your case.
Another drawback is the tribunal can only hear claims up to $30,000. For many renovation disputes, this will be far too low.
Going to court is your final resort. Ministry of Justice figures show there are long waiting times for civil hearings. In the High Court, it could take up to a year for your case to be heard.
Legal costs are also high. This means even if you’re successful, you could end up out of pocket – or not much better off from where you were.
You can complain to the Building Practitioners Board if a licensed builder has done a substandard job. Builders must be licensed – or supervised by someone who is – if they’re doing restricted building work. However, the board can only discipline the builder – it can’t order reparation. That slap on the wrist won’t fix your leaking window.
Building guarantees can offer some redress if things go wrong. The two major building trade organisations – the New Zealand Certified Builders Association and the Registered Master Builders Association – offer guarantees for work done by their members.
They cover loss of deposit, defects and non-completion of work (although only up to set limits). There are also numerous exclusions under each guarantee. If you’re looking at a scheme like this, get your lawyer to make sure it covers you over and above the Building Act. If it doesn’t, treat it the same as someone offering you an extended warranty in an electronics store and save your money.
Fixing problems when building work goes wrong should be much easier than it is. Regardless of whether you spend $50,000 redoing the kitchen or $500,000 on a new build, you’re largely on your own if things come unstuck.
We’ve been pushing for a mandatory building warranty insurance scheme to fix that and provide better consumer protection.
How would it work? In short, you’d pay a bit extra up front for a warranty and, in the unhappy event something goes wrong, your cover would kick in.
This type of warranty scheme already operates in Queensland. For any residential building work above a set value, builders in the state are required to obtain insurance from a statutory body (Queensland Building and Construction Commission).
Homeowners pay for, and are the beneficiaries of, this cover. They can claim for losses arising from non-completion or shoddy work. That’s regardless of whether the builder is alive, dead or otherwise missing in action.
As well as running the insurance scheme, the commission is responsible for disputes resolution and builder licensing. Builders in the state must be licensed to carry out building work valued at more than A$3300. Licence fees help fund the commission’s work.
Among its powers, the commission can require defective or incomplete building work to be remedied. If the contractor fails to do this, insurance comes into play and the commission pays out to remedy outstanding problems.
It has the power to pursue the builder for costs – so consumers aren’t left to do the job themselves – and can also prosecute offenders.
A similar mandatory scheme here would ensure homeowners had somewhere to turn to when their builder didn’t deliver. It would also help lift standards in the industry: builders would know if their work wasn’t up to scratch, they’d face financial penalties.
Making the scheme mandatory for work above a set threshold (we suggest $30,000) would help keep premiums affordable by spreading risk over a bigger pool. The more people who take out the insurance, the lower the cost of cover.
A mandatory scheme would also avoid the risk of a builder telling customers that the insurance wasn’t necessary so they could make their quote appear cheaper and undercut others tendering for the work.
The benefits of a disputes body similar to Queensland’s would also be sizable. Building wrangles are often complex and technical. Having a specialist body that could deal with them would be more time and cost effective.
The idea of a warranty scheme has been debated for years, with little progress. However, the government is planning to investigate options for building warranty insurance as part of reforms to the sector.
Australia’s experience shows any warranty scheme will need to be government-backed. Private insurers have been reluctant to offer cover that comes anywhere close to meeting consumers’ needs.