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Understanding building guarantees

Tuesday, August 19, 2014

In this week's Ask An Expert feature, lawyer Adina Thorn shows investors how to understand builder's guarantees.

APIA Ask An Expert

I am about to engage the services of a builder but am overwhelmed by the different building  guarantees out there on the market.  A couple of friends of mine had trouble in the past enforcing their guarantees,what I should look out for when I assess different contracts?

APIA Ask An Expert

In any building contract you want to know what the builder is promising to provide you.

Generally, the contract starts with what the builder is agreeing to build (often by reference to the plans and specifications). From there many building contracts provide further guarantees/warranties.  These are in addition to your other legal rights – including under contract, in tort, and under legislation (such as the Building Act 2004 and the Consumer Guarantees Act 1993, where applicable).
You need to work out

  1. how the guarantees/warranties relate to your other legal rights 
  2. what additional protections they are giving you, and 
  3. that they will work in the way you think they do, should you need to enforce them.

From there you want to consider issues like who you are contracting with, what security you have, and what provisions there are if something goes wrong.
You also want to look at where and how you enforce the building contract if something goes wrong.
I strongly recommend you to seek legal advice in relation to the types of contract and ensuring that appropriate protections are in place.

Adina Thorn
Adina runs a specialist litigation law firm, Adina Thorn Lawyers with expert skills in property, construction and commercial litigation. She holds degrees in both Property and Law (Honours). Her knowledge in relation to property matters is a real strength to her clients.

Do you have any property related questions for our panel of experts?  Comment below or email us at questions@apia.org.nz.  

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