Hi, has anyone have any experience with Eco Smart Homes Auckland

Hi Ludmila, The 9 months to build your house, is that from when they start to when they finish? or is it from when the contract is signed until they finish as they may not physically start on your house right away once your contract is signed does this make sense? I hope you get what I mean 🙂 I’m very much hoping you had a lawyer look at your contract, but going forward you need to keep an eye on the build and whether it’s being done properly (i.e exactly to the plans which would have been approved by your local council) because if it’s not you may not be able to get a code of compliance for it at the end so the plans are integral and they need to be followed by Eco Smart to the letter. Be as involved as your time will allow with the Council Building Inspections that will take place at certain stages in your build, ask Eco Smart when these are as they will have a rough schedule and ask to either be notified the day before it takes place so you can be there and if you can’t be there, ask them to scan and email it to you on the same day. Most companies allow for 5-6 Inspections over the course of the build. You don’t need to be a builder to read these. It states very clearly whether they have failed in an area and when they have not and if in doubt, don’t call Eco Smart for clarification call your council. if they fail in an area, this inspection report should tell you why and if or when they need to remedy it for another inspection to take place. The Council are only responsible for issues that involve the Building Consent and the Approved plans that go with it and these things are in place so your build is safe and watertight etc, poor workmanship like uneven floors or crooked weather boards or anything that looks bad is not in the councils scope to comment on and unfortunately that is all up to you to Police and please trust me when I say that it is far easier to have something fixed, altered or replaced as soon as you can possibly find it, if you get too far down the line you have to start undoing things that may be perfectly fine, just to get to the bits that aren’t and it has been known for the housing company to charge the client for undoing and redoing the things that were OK so catch anything quickly if you can. Think of it like Knitting! If you drop a stitch at the beginning but don’t find it till the end then you need to unravel it all but all the unraveling and re-knitting has a cost attached to it and building is much the same. Please go through this website and find all the very helpful info people have supplied regarding PC sums too, no doubt you will have this in your contract. As for selling it when they are done, I’m assuming there are progress payments at certain stages of the build listed in the contract? I can’t see how on earth they could sell it, even if your contract has an 8 month life span, if you hand over any money during the building process at all surely that would still make it yours at the end? Or are you worried they may increase their asking price if their build takes 9 months and you contract is only valid for 8 months and house/land prices go up in that time? I can’t tell you unfortunately, that would be what a lawyer and your contract would figure out. If you do have progress payments and they say something like “$20k paid when the roof is on” just check the building inspection reports that the roof had been done properly and they haven’t failed anything. Their version of “The roof is on” vs the councils version may differ completely. If it hasn’t passed, don’t pay. Same goes for any other progress payments, if it hasn’t been signed off by the council then it’s quite possibly not correct and nothing motivates a builder/building company to fix their mistakes quickly like not being paid!! I hope I haven’t scared you! Many of us on this blog have been through hell and back with builders, building companies, the LBP etc but that does not necessarily mean there are not good building companies out there so my last piece(s) of advice to you would be to stay alert, stay involved and never, ever feel like you are being an inconvenience to anyone if there is something you are not happy with. Write it down, ask for it to be changed and stick to your guns!! Let us all know how you get on 🙂

Hi MJ, Thanks a lot for your valuable advice. We got the contract checked by a lawyer and it’s on turn-key. The contract expires on September and we need the Code Compliance done before settlement. They basically said they’re waiting for the Council to get the titles. They are building more than 30 houses over there. They’re hoping to start building from March or end of Feb and go for the settlement in August. We are really looking forward to this house. If this one doesn’t go well, we will have to look for another house end of this year. But we really don’t want to, as this house was offered to us (and others in this area) at a good price.

Please just also note that if you are sent a progress payment invoice once a milestone has been met e.g. roof is on, but you don’t believe workmanship to that point is up to scratch then you need to follow a specific process. There is a document required on which you need to state amount of payment withheld and the reason for withholding etc. When I build my first house I simply sent an email stating that the milestone had not been met in my eyes and I would not be paying the progress payment until the work was completed to a satisfactory standard. Once everything was resolved months later they charged me interest for the amount outstanding from the progress payment date to the date I actually paid. If I had followed the correct process they would not have been able to charge this interest. At the time there was no way I could have known this unless I had spent money consulting a lawyer – hence the value of this blog! Good luck.

Thanks Chris 🙂 Yes, I just found this website and it seems great 😀 But we aren’t on progress payment. Eco Smart homes Auckland will get the deposit (which is sitting in their lawyer’s account at this moment) and the rest of the money from the bank only after the settlement. That’s why, someone else (a property investor) was telling us Eco-Smart Homes Auckland might sell the house to someone else after completion and expiration of our contract.

How can they do that if you’ve paid a deposit and they’ve been sitting on it for 9 months! If they do they’re robbers and thieves! I’m so glad for you though that you dont hand over any more money until it’s done, but like I said before Code of Compliance is one thing, poor workmanship is something else entirely so make sure you’re happy with EVERYTHING before you take the key!

Hi Ludmila, I’ve just spoken to a friend of mine who is a big scale property developer and he says that Yes, you are right! What they are doing is using your deposit to fund the build(s) and then when they are done they will sell it off to the highest bidder and it’s in their best interests to make sure the completion date is after the time your contract expires as they would have to then sell it to you for the agreed amount, which would be much lower than it’s worth. So effectively what they are doing is advertising these house and sections packages way under value so people like yourselves will leap in and hand them money to secure it, they then use your deposit and probably several other peoples too and they build the first house. Once that house is sold, it can bank roll the next, and then the next etc etc all the while using your deposits along the way. He said it’s not illegal but it is hugely unethical and the ONLY companies who do this are ones that have a bad credit rating and can’t secure the money for projects on this scale OR overseas companies who can’t bring in their own money or use ours i.e some Chinese companies. He did mention also that your lawyer should have secured you an interest rate to be paid back to you along with your deposit if they did sell it to someone else. I’m hoping he’s right? Please tell me he’s right?

Sounds like a ponzi scheme,unfortunately most lawyers will tell you not to sign the builders agreement as they are so heavily biased towards the builder to the extent of being unfair contracts,what do you do when they all have the same tactics. I signed an agreement with a “luxury house builder” for a one year contract to build our home,$100,000 deposit.Eight months in they hadn’t even started the project,they were just using the money to fund their show homes etc.As for groups like masterbuilders they are nothing more than a marketing tool. They count on the fact that any legal action takes some time to action and the cost is considerable. The LBP is usually the builder,they then employ the cheapest labour they can find skilled or not and hope for the best. The quality of the builders was atrocious they couldn’t even cut a straight line which is basic building competence. It is a very unregulated industry and they are very well aware of it. Ultimately word gets around through sites such as this,there are good builders that have some integrity and pride of work ,finding the right one is the minefield.

Sure MJ 🙂 Will definitely keep on checking and will go for the settlement once EVERYTHING is satisfactory. Thanks heaps 🙂 🙂

No, our lawyer hasn’t secured an interest rate

Thanks a lot for checking MJ. At least we can prepare ourselves to buy a different house end of this year.

A word of caution on legal contract reviews. I highly recommend using a solicitor who specializes in construction. I used my generalist solicitor who failed to highlight the heavy bias towards the builder. Later down the track when I entered the disputes phase I used a specialist who was shocked that I had signed such a contract but then did an awesome job of digging me out of a hole. Like builders there are solicitors and solicitors.

This may not be the case though, you never know my mate did say they don’t all do it but it’s hard to know. But housing is so stupidly expensive especially in Auckland so you guys probably need to be more thorough with your research than most and If it sounds too good to be true then it probably is. I’d be going over my contract again to see if they’ve missed anything that you can use to hold them to it, it’s worth a shot? If they do on sell it to someone else when it’s done I’d be involving your local Labour MP, Jacinda is all for first home buyers so I don’t think Labour would let this happen lightly if they knew what was going on. Please let us know how you get on, I would love to be wrong.

Hi Chris, I’ve written a number of times on this blog under the name ‘Chris’, but for clarity I’ll call myself ‘Chris C’ from now on. I’ve written several times regarding the importance of people sorting out the wording of their building contract before giving a builder any money, or getting very far down the track on house design or costs, and also making sure that you get legal advice from a solicitor with experience in building contracts. I’ve spent my whole career as a civil engineer dealing with construction contracts, so I totally agree with you. Many generalist solicitors claim they know what should be in an acceptable (from the client’s point of view) contract, but they do not. However, one point I’ve never actually mentioned before, which may help some people with no knowledge of building contracts, is to take a look at the NZ Institute Of Architects ‘Small Works Contract’ (or even their ‘Standard Conditions Of Contract’ if you feel like a lot more reading). You may not be able to use it wholesale, partly for copyright reasons, but also because it’s written based around the principle that the works will be supervised by an Architect. But in my view it gives a very good idea of what you should (and should not) expect to see in a reasonable contract.

Hi MJ, Yes, will surely do that and will keep you updated. I really can’t thank you enough. Thanks heaps 🙂

Hi, can anyone on this site please clarify the process and rules when there is a variation to a signed Building Contract Price? I am considering seeking legal advice, but need guidance from people that have experienced similar issues. My issues are as follows: 1. Signed a Fixed Building Contract based on a Concept Design. 2. The Contract included some PC and PS Sums. 3. Has the Concept Design was refined, there were changes to a few design elements. Some changes were mandatory as it did meet the restrictive covenants and some were upgrades to the design elements. The size and footprint of the Concept Design remained the same. It never changed. 4. The Building Company then used these changes to re-price the entire build. 5. A new quote/pricing was then presented to me. 6. I was not provided with itemized charges to the variations. 7. Building Company refused to itemize the costs to these changes and refused to engage with me on how they arrived with the new Building Price. Can anyone on this site share some ideas on what the process is if there are variations to a Contracted Price? Has anyone experienced something similar to this? Any guidance will be greatly appreciated.

Just a thought, the lawyer that you used were they recommended by this housing firm? Or are they in any way associated with them? You may be able to get another lawyer to void the contract siting “conflict of interest” On their part if you want to that is. It depends on how you want to proceed, I would hate to think all our advice has unduly scared you and I don’t want you to feel we are all pressuring you in any way.

I would like to know what area you are building in? Hoping it is not in the same area as us as we are dealing with a similar situation.

Hi Natty, You have asked a lot of questions, which unfortunately it is impossible to answer in detail without knowing exactly what your building contract says about Variations. But looked at in a very broad way, even if the contract is absolutely fair and reasonable to both parties in this respect (which in your case I suspect it isn’t): 1. You cannot have a truly fixed price contract if it has Prime Costs and Provisional Sums, because the whole point of these is they can vary according to the actual cost of the items supplied or the work carried out. 2. Of course if the design is changed then generally the cost will change, and if the original cost was based on just a concept design then this is usually inevitable. Which means a so called ‘fixed price’ based on a concept design is almost a contradiction in terms. 3. The fact that the overall size/footprint remains the same is not irrelevant, but it means very little, because you’ve said these were ‘upgrades’, so you would expect them to cost more. 4. So of course the overall build cost is likely to increase. Whether the builder is contractually bound to itemize the new costs or tell you how he arrived at them depends on the contract wording. (Although it may be worth getting a knowledgeable solicitor or other professional to look at whether the contract wording meets NZ law in this respect. I believe some things in a building contract are required by law, or if omitted then deemed to be included.) 5. I think you urgently need expert advice. Although I suggest you first ask yourself (or maybe someone like a Quantity Surveyor) whether the revised price is excessive considering the changes, or actually reasonable. Just because the builder didn’t tell you how he arrived at the changes doesn’t automatically mean he’s ripping you off. Although I must admit it’s a very bad omen for future relations with him, and personally I would run a mile from a builder who takes that kind of position, even if he’s contractually in the right. 6. If construction has not started, what does your contract say about whether you’re bound to continue if the contract price increases? Do you have the option of pulling out?

Natty unfortunately if you have p sums in your contract then its not a fixed price. The p sum issue is used to quote you a price that you find acceptable,if you are dealing with an unscrupulous builder he can charge pretty much what he likes as you have agreed to it,its like an open checkbook. We were caught with the same things on our contract,sure if you cannot ascertain the cost of something beforehand then then it may get used. In our case the p sums were abused every time,when we questioned it we were told they only have to supply an invoice. We considered losing our $100k deposit and walking away ,we were reassured it was the only time. It wasn’t! In retrospect the rot had set in and every opportunity they had to apply the p sum they did,some by as much as 100 percent. These are supposed to be experienced builders the costs are quantifiable ,they should be able to keep to the quoted price. Nothing you can do. If I had my time again it would have been cheaper to walk away and start again and avoid many years of grief as it was a total nightmare.

Hi Natty If you can pull out of the contract and if you are using a lender to build, Just as another tip. I recommend Newbuild finance. All I can say is thank god we chose them as our lender. We had to have a fixed price contract (no PC sums) if we made changes (which we did several times to upgrade fixtures and fittings etc) we had to complete a “variation agreement form” with all breakdown of costs signed by the builder and the client. This is designed to stop the predatory charging and dishonesty that comes with having only PC sums as a baseline for costs and also protects client and builder from he said she said crap. Builder also had to issue invoices to ensure we had the proper paper trails etc.We paid for the variations out of our own pockets but Newbuild had to be aware of everything. They have strict controls in place to make sure the builder does not get ahead with payments and is only released progress payments when their independent accessor carries out inspections on site to make sure the work has been completed and is satisfactory. Our build was a disaster and could have been a lot worse had we not gone with Newbuild. Some builders dont like the controls in place as it prevents them from getting away with stuff and wont sign up to them but a good honest builder wouldnt have an issue. They do take some of the pain and worry away acting as abit of a safeguard in that respect.

The lawyers were not recommended by the builders, but we definitely will look into it again. Thanks a lot guys

Hi. Build was to take place in Auckland. Can you please share your experience. Not sure how I am going to sort this out.

Hi. The variation changes were to a few design feature elements. It had little or no impact on the aspects of the contract that had PS and PC sums. I had the contract independently assessed by a Q.S. The Q.S looked at the contract on signing and after the addition of the Upgrades. Q.S found that the contract was underpriced on signing. Q.S also found the new price was massively inflated. Building Company does not want to accept the findings of the Q.S

Hi Natty From what I read on this website it’s a very common tactic for building companies to under quote their contracts, which works to lure you in, and then once you’re in they use the PC sums to get what they actually want out of you and they almost never give you a breakdown of costs to justify it and yes they get away with it because they do it often and they know how to within the legal boundaries that are set. If I were you I would really urge you to focus on trying to get out of this contract instead of trying to get the building company to see it and accept it from your point of view, especially as it appears you haven’t started building yet because you do not want to put your trust in a company that uses this tactic and I can almost guarantee you that this will not be the only trick they have up their sleeve. So if it’s at all possible I would get out quickly and if you’ve invested money in this already (like for drawings) then you need to read through this website and then decide if the loss now will save you more later on down the track as it’s only you that can make that decision. If the trust is not there at the beginning then it’s a pretty good indication of how the rest of your build will go, and like I’ve said many times before once the merry go round starts it won’t stop to let you off no matter how scary the ride gets. If you do decide to stick with them and can even get your contract amended to something you can both agree on then moving forward you have to watch them every step of the way because the contract is not the only way they can get money out of you. They can cut corners on your build in a hundred different ways to save $$$ and some corner cutting may not comply with your plans, and if your council are onto it they should pick it up and demand it be rectified. Sorted. But there are many, many grey areas in building too especially with the materials which can be altered and substituted without your knowledge and in many instances it’s perfectly legal for them to do this. For example; Colorsteel aluminium cladding – you may very well have it in your plans for your roof BUT “Kiwisteel“ who supply their aluminium to over 60% of NZ, Import a thinner, less durable product from China that’s not powder coated to withstand the kiwi sun and just because it says Kiwisteel doesn’t make it so. This cheap steel is distributed through The Roofing Store franchises and it’s much, much cheaper than the Colorsteel (trademarked) cladding from NZ Steel and Tube which is thicker AND powder coated in NZ and unless your building plans are UBER SPECIFIC then the cheap stuff is what you’ll get and in five years time you’ll be seeing the yellow zinc coating underneath instead of the actual colour you’ve chosen when the kiwi sun fades it all off. So just saying, can you still trust them now and can you put in the time to make sure your build goes the way you want it?

Hi Natty, As I said before, what actions are open to you now depend very much on the exact wording of your contract regarding Variations. (I just mentioned PC and Provisional Sums as one other way that a contract you thought was fixed price isn’t really.) But if your QS looked at that before you signed it, and let you go ahead, then ask him/her to advise what rights you have. If he/she doesn’t know, or tells you there’s not much you can do, then clearly he/she’s the wrong QS. Perhaps has knowledge of prices, but not contracts. That would be very disappointing. But not surprising to me, when I look at the state of the NZ building industry, much of which seems to be set up to take advantage of people who are very inexperienced regarding building contracts. People work their whole lives in this industry, and still construction contracts frequently (usually?) end up over time, over budget and in some kind of legal dispute. It’s not really a game for amateurs. I suggest you also read MJ’s response, which makes a lot of sense. He/she seems to agree with me that if you’re in this much dispute already, best to try to cut your losses and find another builder. Although how much it will cost you to get out will again depend on the exact wording of your contract.

Hi MJ, Also see my reply to Natty. I totally agree with your advice. In my experience once the relationship of trust, and ability to have reasonable discussion and compromise with a builder are lost, especially at such an early stage, then it is unlikely the job will go well. Of course you still want and need a tightly written contract, just in case things go wrong. But if you have to rely on falling back on that over disputes it is a constant uphill struggle. And of course most clients don’t have the time or expertise to be supervising the work very closely. So a bad builder can get back at them by cutting corners in all sorts of ways no one can see. Very difficult for the client to win that game.