I trawled through this site prior to building in Tauranga and promised myself...

Lucky you didn’t have to call on the Master Builders Guarantee. I understand its difficult to get a payout and relies on the builder to lodge the necessary forms at the start. If the builder doesn’t do this you’re not covered but have more than likely paid the premium for the sum assured amount.

Hi Nigel, Perhaps unnecessary to say this, but it might help some people. With everything like this on a build (MB Guarantee, Contract Works Insurance etc) which your builder is supposed to obtain/arrange it pays to make your own enquiries. In my case I called MB directly when I did not receive their paperwork, and found (despite the builder saying he had done everything required) that the MB Guarantee application and payment had been received, but not issued because the builder had not paid his current membership fee. (He did after I chased him.) I can’t speak about whether MB ever actually pay out, but I found them fine to deal with on other things. But be warned that you could find even if they were to pay out in full on something, the amounts in their Guarantee may be a lot less than you stand to lose on a build in NZ these days. Similarly I suggest everyone should get their own copy of the builder’s CWI cert and policy, to make sure it complies with their contract, and the amount of cover is sufficient. Then you can if you want arrange your own insurance to cover aspects not covered by theirs.

It was a condition of finance with NewBuild / AIA that the MB Guarantee was in place and current. Simon at Navigation was great at chasing up MB, and made sure everything was in place. I haven’t had personal experience of trying to get a payout, so can’t speak to that.

Thanks for the additional clarification. I hope that other people see your reply as it indicates how wary one has to be and do your own due diligence. Sadly due diligence excludes about 95% of the people on this website judging by the questions asked. In addition I doubt whether most read the building contract. The two contracts i’ve read from two of the larger franchises do not need a lawyer to interpret. At most if I recall I would have had to refer one or two clauses to a lawyer. I have yet to build but with the high volume of residential work trying to change a contract to be more neutral would be mission impossible. Builder would just move onto the next muggins. i live in NP so can’t speak for other parts of NZ although I feel Akl would be very similar. I take many of the comments about this or that builder is bad unless outright fraud, with a pinch of salt. Would suggest most of the problems are contract related rather than out and out technical issues.

Hi Rich, Thanks, this is very interesting. People have implied on this blog that the MB Guarantee is virtually worthless, because they almost always find some way of avoiding paying out. I have found MB fairly responsive and reasonable to deal with on other matters, but I can’t comment on them paying out, because I’ve never actually made a claim. And I have wondered whether peoples’ claims had failed because in some way they had not understood or followed the guarantee conditions. But your comment makes it sound as though NewBuild/AIA consider that it is important to have the guarantee in place. And you would assume they would only do that if they had some reason to think that MB would cover at least part of a claim, which would save them some money. Why else would they care? But it would be interesting if you could talk to them regarding their experience about MB paying out on claims, and let us know what they say. Or am I being very cynical in wondering if they don’t care whether MB pay out, because it’s your job to get the money out of MB? But NewBuild/AIA can then avoid paying you the amount you are ‘supposed’ to get from MB. It would be great to clarify some of this stuff.

Hi Nigel, Thanks for your thanks. I totally agree with everything you say up to about the middle of your first paragraph. But after you said ‘I have yet to build … ‘ you said some stuff that concerned me, as in my view it’s a bit misleading for those not experienced in the building business, and kind of contradictory. In your last paragraph you seem to doubt other peoples’ words that builders can do a poor job without actually being fraudulent. This of course is not true. I assume fraud is a crime, and you could get the police involved. But I doubt if many cases of poor workmanship, failure to complete on time etc, would fall into that category. Having said trying to amend contracts to make them more ‘neutral’ is just too hard, or even impossible, in your last sentence you point out that many ‘technical issues’ (by which I assume you mean things like poor workmanship, arbitrary changes to design/materials, extra costs for variations etc) happen because the contract either does not prevent them, or does not give the client enough power to demand that the builder put things right. So you have given a very good reason why anyone going into a build cannot afford to accept it, when a builder says an unfair or biased contract cannot be changed. If they say that then in my view they are the wrong builder for you. I’ve spent much of my career writing and supervising major construction contracts, and I agree that many NZ building contracts can be understood by most reasonably intelligent people. But the problem is that many of those people ‘don’t know what they don’t know’ as the saying goes. Understanding it is one thing. Knowing what’s not in it that should be, and knowing what may lead to trouble later, is something else. I’ve written about this in this blog before. You should look at the builder’s contract before you pay them any money for anything, and if they’re not open to making changes (of things you or your lawyer think are unfair, or have been omitted) then walk away. I believe there are standard minimum requirements for a NZ building contract over $30K, but it’s worth looking at NZS3902:2004 (Standard Building Contract) for an example of the kind of thing you should be looking for, although I know there are other standard forms that some people recommend.