What to do when you have a problem with a builder or contractor.
Why things go wrong
While many houses get built without any major glitches, in some cases it can become a stressful experience laden with problems. There are a few key reasons for things going wrong. These are:
- Unrealistic expectations of the owner.
- Over-demand for services and materials leading to shortages and delays.
- Lack of communication and misunderstandings.
- Unscrupulousness or dishonesty (on either side).
Listed below are more specific examples of these.
Problems caused by the owners
Make sure you don't cause problems for your builder by:
- Failing to do what you’ve promised, for example, arranging the plumber to turn up on a certain day.
- Failing to pay on time. The builder shouldn’t have to wait for overdue progress payments as they will be carrying the cost of the materials and wages.
- Failing to make the final payment – some people hold on to the final retention payment for longer than necessary, even after everything has been signed off and faults rectified. This is unscrupulous and may be a breach of contract.
- Misunderstanding the plans, specifications or contract documentation and making incorrect assumptions. It is difficult to visualise what the finished house will look like, but it is not the fault of the builder if at the end, you say “that’s not what I expected” if everything is built properly to the specifications.
- Buying materials for the job, without consulting the builder, that are cheaper than the quote for them in the contract documentation (so when there’s a problem with the product it leads to arguments as to who gets it fixed or replaced. Also the builder’s guarantee may not cover it).
- Going into the project with the attitude that the builder and subcontractors will try to rip you off, without understanding the complexity of the building trade.
- Having unrealistic expectations, for example, you install cheaper soundproofing and are disappointed when you can still hear people moving around upstairs. Do your homework about these sorts of features and if they aren’t what you expected, don’t use it as an excuse to not pay the builder.
Delays, delays, delays
In recent times builders and other trades have been in enormous demand, as building work has increased around the country.
This could cause potential problems on your project. People we have talked to have reported huge delays in waiting for builders and other contractors to arrive, only to have them disappear for weeks at a time in the middle of the job. The failure of one trade to turn up on time leads to a domino effect. Re-scheduling everyone is difficult because there are so many people affected.
Other events that can delay work are:
- Hold-ups in getting building or resource consents, also due to council backlogs because of huge demand.
- Bad weather – which the builder can't control.
- Finishing, for example, the painting takes longer in winter and bad weather.
- Injury to a worker – it may be difficult for the builder to find a suitable replacement.
- Variations – you might have to take some of the responsibility for this if you have asked for lots of changes. Or there could be shortages in the supply of materials, also a result of a high demand in the building industry.
The shortage of tradespeople could be one of the reasons people are reporting increasing amounts of shoddy workmanship.
Arguably, the quality of workmanship is being compromised because contractors are rushing work in order to get to the next job. While it is normal for builders and subcontractors to be involved on more than one job at the same time, if they are overcommitted they risk compromising quality in the rush to get things done quickly.
The problem seems to be made worse by a lack of qualified tradespeople, meaning builders are having to hire less skilled staff.
If you think the workmanship on your job is substandard, you could hire a building consultant to do an independent check.
If a building firm goes under
If your builder’s operation fails, you may be left with an unfinished house, or a house with lots of unresolved defects.
Unpaid subcontractors may take back materials they have supplied. In this case you may have legal remedies. Talk to a lawyer.
Tip: Make sure it is not in your contract that you pay for work in advance. This will protect you if the builder does not complete the job. (Except for any deposit you’ve agreed in the contract.)
Problems with plans and specifications
Plans and specifications may be incomplete or ambiguous, either due to incompetence on the part of the person who did the plans or because not enough time and money was spent on them. This can lead to these problems:
- A builder's quote will be less accurate if given partially completed plans and specifications to tender on and the builder will be building with incomplete documentation.
- Designers sometimes rely on variations as a way of correcting conflicts or inaccuracies in the plans and specifications, or they issue additional information that should have been there in the first place. This increases the number of variations on some jobs the cost of which, either you or the builder will end up carrying.
Problems with the contract
When a standard contract is modified, sometimes the owner or the builders and subcontractors don’t have time, or don’t take the time, to get legal advice on the meaning of changes to standard conditions. This is going into a contract blindly. It can result in misunderstandings and when things start to go wrong, the parties to the contract might not be protected.
Reluctance to start the dispute process
No one likes confrontation. When disputes arise, people are often reluctant to invoke the dispute resolution provisions in the contract, for fear of upsetting the other person and making the situation worse. But if the situation is left, it is likely to deteriorate.
Problems with costs and underpricing
Be aware of these potential problems with costs:
- Sometimes the designers, builders and subcontractors are too busy to keep up with their paperwork so you don’t know what you are paying for a job until the final costs are known. This would happen under contracts without fixed prices or guaranteed maximum prices.
- To get work, builders and subcontractors sometimes take an optimistic view of the job and underprice. They then try to make gains later by negotiating with you, subcontractors and suppliers. This can lead to blowouts in your budget.
Problems with variations
Variations should be dealt with in writing and within specific time frames. Problems arise when the builder or subcontractors don’t keep with the timeframes and don’t follow the rules in the contract about pricing variations. Or if they go ahead and make variations without your approval. You can end up with something you don’t want and unexpected costs.
Failure to follow the specifications
Builders and contractors who have been in the business for a long time sometimes fail to read the specification documents properly and just do what they usually do. This can lead to mistakes and substandard work, and costly rectification work. It can be difficult to get the contractor back to do the rectification work and there are often arguments about who should be paying.
What can you do if you have a dispute with your builder or contractors? What happens if you are dissatisfied with the job being done? We look at your options.
When you have a dispute with the builder, the steps for getting it sorted are:
- Try and talk it through. It might simply be a mistake or misunderstanding.
- If that doesn’t work, look to the contract. You should have dispute resolution procedures in the contract such as mediation and arbitration. Also, check to see if any guarantee you hold covers disputes.
- FairWay Resolution Limited recently launched a dispute resolution service between builders (and other contractors involved in building houses) and home owners.
- Find out it a trade organisation will act as an intermediary or offer dispute resolution services, for example:
- Registered Master Builders Federation
- Certified Builders Association of NZ
- Electrical Workers Registration Board (EWRB)
Master Plumbers, Gasfitters & Drainlayers NZ Inc.
However, many builders and contractors do not belong to a trade organisation and trade organisations do not usually get involved in contractual disputes.
- For disputes over progress payments you should use the adjudication service under the Construction Contracts Act 2002.
- You could both agree to go to arbitration.
- The Weathertight Homes Resolution Service (WHRS) provides a dispute mechanism for leaky homes.
- The Ministry of Business, Innovation and Business (MBIE) deals with disputes about the issue of building consents and code compliance certificates.
- Disputes Tribunals deal with claims up to $15,000 (or $20,000 with the agreement of the parties). This may not be high enough for many building disputes. If you choose this option, you usually cannot take the dispute through the Courts.
- Finally, you can take Court action. This can be costly and complicated but, in some cases, may be the final resort.
Note: You can take a complaint about the standard of work of a licensed building practitioner to the Building Practitioners Board. If the complaint is upheld the licensed building practitioner can be disciplined.