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Protecting your investment

Posted on Dec 12, 2012

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By Duncan Terris

Many Christchurch residents now have a better idea of a way forward with their housing requirements since the first big Canterbury earthquake two years ago.

Some will now repair and take the opportunity to upgrade their homes and others will have no choice but to buy elsewhere, build on their existing land, or find a new site.

Let’s face it, for most us, our homes represent the bulk of our life savings or net worth and it is extremely important to protect that asset as much as possible. Making early contact with a property lawyer for any building contract work, whether it be a new build or partial renovation, is critical to protecting your investment.

Your lawyer will have good experience of knowing where potential problems and disputes may arise and can work to minimise the impact of them, while saving you unnecessary headaches and more importantly, your money.

Property law is a specialised area and there are many traps for the unwary, even for the experienced buyer, seller or building project manager.

Building is synonymous with risk and stress and there are horror stories of building projects that have gone off the rails. But much of what you hear could have been prevented with good prior planning and documentation.

Many disputes arise from genuine misunderstandings due to lack of detail about what the owner expects they are getting and the builder’s perception of those expectations.

In Christchurch especially, it is imperative to know in advance what the state of the underlying ground is.

The Canterbury Earthquake Recovery Authority (CERA) has allocated a multitude of colour codes and technical categories.

Within these categories, there are subgroups of ground instability, which can be viewed on the CERA website www.cera.govt.nz.

This is important for any building project as virtually all building contracts have an assumption of the standard depth of foundations. Clearly, that will not be the case for most new residential buildings in Christchurch. It is not uncommon, for instance, for pile depths to be required as deep as 20 metres or more.

You simply cannot enter a building contract without absolute certainty on the scope and cost of sub ground works that will be required.

At best, most builders will have a contingency amount or a “provisional cost” that is subject to change. Checking this cost is vital as some contracts actually state “not intended to be an indication of the likely final cost”.

The Department of Building and Housing now requires that a licensed building practitioner is used for every aspect of a build, and this has been the case since March 2012 for Restricted Building Work.

Verifying and checking the certification of those doing the work on your home is very important for such things as placing foundations, cladding and roofing.

There is a perception that it will save you money to avoid utilising a property lawyer to review and advise on a building contract.

A property lawyer can help protect you in a Building Contract by checking a building company’s status on the Companies Register, and will review the amount and timing of progress payments.

As a general rule, you should never pay more than a 10 percent deposit or the value of the completed work.

Also, when delving into a new build or renovation, watch out for the builder who claims they need an “up front” payment, as any good builder will have a credit rating to allow them to purchase “on account” with suppliers.

Your property lawyer will also review insurance cover during the build, finalise timelines for the start and completion of work and penalties for unreasonable delay, provide a process for agreed variations, dispute resolution, set a maintenance period for defects after completion of work and the assignment of benefit of any product or appliance warranties.

A lawyer’s advice will almost always save you problems further down the track when rebuilding or renovating your home. Members of the New Zealand Law Society’s Property Law Section can provide you with the advice you need. Visit www.propertylawyers.org.nz to find a property lawyer member near you.

I wish Christchurch residents the very best in whatever building project lies ahead.

Duncan Terris has been in legal practice since 1988 in both New Zealand and Australia. He founded the firm mobile Conveyancing Services in 1997 seeing a need for a property specialist firm with personalised service. Duncan is a regular course presenter for the New Zealand Law Society and has served on various Law Society committees for more than a decade.

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