Disclosure statement and standard checklist
Before you agree to any arrangement or sign a contract, make sure you've seen the contractor’s disclosure statement and the government's standard checklist.
You must be given the disclosure statement and standard checklist if either:
- you ask for them
- your residential building project will cost $30,000 or more (including GST).
The disclosure statement must cover key information about the contractor's business, including:
- their name and/or legal name of the entity
- the key contact person for the project
- insurance details
- any guarantees or warrantees they offer.
The contractor could also include this information as part of the contract, instead of in a separate document. Ask them to highlight where it is, if they do.
Disclosure and checklist(external link) — Building Performance
The checklist gives you tips and information about the building process and the minimum requirements of a contract. It is designed to help you with the seven key steps in the building process.
Download the prescribed checklist [PDF, 124KB](external link) — Building Performance
What the contract should include
Your written contract is key to making sure you and your contractors are on the same page about who's doing what, how much it will cost, and what will happen if things go wrong.
What your contract must cover(external link) — Building Performance
Make sure you:
- fully understand all the clauses that you are agreeing to
- know when you'll have to make payments, what the payments will cover, and make sure you have the money available to make the payments on the specified dates
- are clear about what you need to organise, eg
- the builder has to have some insurance, but you might also need to get an extension on your insurance policy to cover any damage to your house
- is the builder arranging the council compliance certificate when work is finished, or do you need to do that?
- make sure the contract gives you a fixed price for the work, or if it doesn't, you understand why not.
For larger, more expensive jobs, get independent legal advice before you sign the contract.
Be sure to list who's doing what, how much it will cost, and what disputes process you will follow.
Guaranteed maximum price
A guaranteed maximum price (GMP) is where the builder or contractor guarantees a maximum price in the contract. These sorts of contracts can work well as an incentive to the builder to finish on time and within the budget. You avoid the risk of uncontrolled extra costs and time, but you will pay a premium because the risk of delays and extra costs will be factored into the price.
If the project comes in under the guaranteed maximum price (GMP), any savings will generally be shared between you and the builder. The ratio should be specified in the written contract.
Any variations you ask for will be outside the GMP and you will have to pay for them.
Making changes to the contract before you sign it
Usually the contractor will supply the contract — make sure you read it (and ideally get a lawyer to review it for you) and if there's anything you're unsure or unhappy about, discuss it with the contractor.
To make changes to the contract, put a line through what you want to delete and write in the changes. You will need to initial the changes, and so will the builder. Check that any changes you make won't affect any other clauses, or any guarantees. If you're unsure, speak to a lawyer.
Making changes after you've signed the contract
Sometimes things will change after work has started. When this happens, you'll need to agree a contract variation with your contractor.
Variations can be for things like:
- discovering something needs fixing that hadn't been previously identified, eg rotten floorboards
- choosing to increase or decrease scope, eg deciding to add a new window.
Depending on the scale of changes, you might have to:
- consult with your designer and have them prepare variation orders and drawings
- agree the alternative construction options with your builder
- get revised costs from your builder
- extend any loans or financing.
Variations should follow the process set out in the contract, and should always be agreed in writing.
Depending on the scale of the variation, you might also need:
- an itemised claim detailing the variations needed
- agreement of the variation by your Building Consent Authority
- a record of any discussions or negotiations
- a record of what was agreed and any payments made
- a summary of the adjustment against the original contract sum.