You must have a written contract for any building work that costs more than $30,000, and it's recommended for smaller jobs, too.
Your contract will be with whoever the main contractor for the work is — either the builder or another tradesperson, depending on the type of work.
When you need a contract
You must have a written contract for residential building work worth $30,000 or more (including GST). As well as the contract, the contractor must give you a disclosure statement and a standard checklist with information about the building process.
For work that costs less than $30,000, you don't have to have a contract, but you can still ask for one. Use this free template to create your own:
Housing, alterations and small buildings contract(external link) — Standards New Zealand
Using a written quote as a contract
You could also use the written quote as a contract, although this often doesn't have the level of detail needed if something goes wrong.
No matter what size the job is, make sure you keep all emails relating to it. Document everything you agree with the tradesperson in writing.
Why contracts are valuable(external link) — Building Performance
Read more about Contracts and sales agreements.
If you're not using a contract
If you decide not to ask for a contract, make sure you:
- get a fixed quote, in writing, with a good level of detail of what the job involves
- keep all emails relating to the job
- make sure any major decisions and agreements are documented in writing, in case anything goes wrong.
Read more about Estimates and quotes
Email trail solves a problem
Desrae's plumber installs a different toilet to the one she wanted. He swears it is the one she chose. He tells her she will have to pay for the replacement toilet plus labour if she wants it changed. Desrae doesn’t have a contract with the plumber, but has been careful to confirm everything they agree by email. She checks through past emails to get her facts straight. Once she is sure she is not mistaken, she copies the messages into a polite email, asking to talk about how the mistake can be put right at no extra cost to her.
You have three main contract options:
The builder manages the whole build phase of the contract, including:
- supplying all the materials
- hiring subcontractors like the plumber and the electrician
- liaising with the architect or designer
- arranging council inspections.
Too busy for project management
Aria and Dave are converting their garage into an office. They're using a builder Aria’s workmate recommends, Chris. She tells them how much work her renovation was and how good Chris was at keeping things on track. Aria and Dave have small children and busy jobs. They don’t have room to manage a building project, as well. They ask Chris to quote for labour and project management — including managing plasterers, painters and an electrician. Once they accept the quote, they draw up a full contract.
You manage the whole process. The builder is only responsible for building, and you are responsible for:
- making sure the work meets Building Code requirements and for any defects in construction.
- hiring, managing and paying all the different contractors
- buying materials
- health and safety on the building site.
People generally choose labour-only contracts as a way to save on project management costs.
Time and skills to give
To save money on her bathroom renovation, Tihema decides to project manage the work herself. She’s used to organising people, is a good negotiator and adores trawling the Internet for fixtures and fittings. Between jobs, she has plenty of time to give to the project. Tihema accepts quotes from a builder, plumber, plasterer and electrician. She organises her bathroom furniture, tiles and other materials needed for the job and pays her contractors by the hour for their work.
Managed labour-only contract
You and the builder jointly manage the project, and agree who will be responsible for what.
Doing some but not all the work
When DIYer Kerry has building work done on his basement, he’s keen to get involved. He goes through the draughtperson’s drawings with his builder. They mark on the plans what the builder will do — all structural work, skirtings and plastering. And what Kerry will pick up — putting down flooring and painting the woodwork. They list what each of them is responsible for in their contract and attach the drawings as an extra record of what they have agreed.
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.
Extra painting work recorded and added to job
Fatima intends to save money on her renovation by doing the painting herself. Three weeks after building work starts, her boss asks her to go to lead a project in Australia. Aware she will never get the painting done, she asks her project manager and builder to organise painters. By email, they agree on a price and what the painters will do, so they have a written record of the change. Fatima asks her builder to add the contract variation and a note of the additional cost to his next progress report.
Breaking the contract
Generally, once you've signed a contract or accepted a quote, you can't change or cancel it. In some circumstances, and with the other party's agreement, you might be able to.
If you decide to cancel the contract without your contractor's agreement, or you don't keep to the terms, you could be in breach of contract. This means the other party can take legal action against you.
If your contractor isn't keeping to the terms of the contract, raise it with them in writing, then follow the steps outlined in the contract for disputes.
Read more about Contracts and sales agreements.