We are planning a new build in Tauranga with Golden Homes aka Steel Frame...

Hi Mark, Good to hear you’ve used the Ctrl F function to check for comments on GH. You could use it to also search for words like ‘contract’ and ‘franchise’. But a bit worrying to hear that despite most of the comments being negative you still hope that somehow the one in Tauranga will be different to the others. You could of course be right, but I guess that depends on whether or not the negative comments related to things that would probably apply to all builders under the same franchise. Personally I would not be too impressed just with the fact that they’re willing to change their plans. In fact I’d be amazed if they didn’t, especially if you still haven’t signed a contract. Why would they not? After all you’re going to pay for whatever plan you settle on. And many builders might like the kind of Client who carries on changing the plans after the contract has been signed. More excuses to charge for variations and delays. Difficult to give advice on how to make the contract fairer, without knowing what Form they use, and what it says. But the fact that you already said it’s incredibly one-sided is a huge red flag. And you haven’t said whether they’re even open to the idea of making changes. Regarding the point about a cap on their warranty liability, I think you should check whether general consumer law even allows this, because I don’t recall seeing or hearing any mention of it before. And frankly I would find it quite worrying that they even try it on.

I have seen one of the GH contracts…the front loading is a shocker….I don’t a lot of their clauses. Wouldn’t use the contract in a month of Sundays. Have seen quite a few different contracts over the past three years and most are rubbish for the Client. People getting hurt with the franchise contracts now and as mentioned most standard lawyers don’t understand them (e.g. for the MB they don’t strike out clause 17).

Hi Chris, thanks for your prompt reply. I am happy to send you a copy of the Golden Homes contract if you are interested. There is also an addendum to the contract which includes a number of extra safe guards for them, such as; Excluded from the Completion and Defects Warranty are the following: 1(a) Any consequential damage or loss or costs of whatsoever nature, whether arising through the negligence of any party or otherwise, including (but not limited to) loss or damage to any part of The Work, payment of rent and the cost of alternative accommodation and travelling expenses where such damage, costs or loss are as a consequence of non-completion, defective work or materials. 5. The maximum liability of the Builder in respect of all claims under the Warranties shall be limited in aggregate to the sum of NZD$130,000 including GST or the Contract Price in accordance with the Building Contract, whichever is the lesser. Based on my research, strangely the supplier/builder CAN contract out of NZ law (FTA and CGA) IF there is an agreement in writing and the supplier and purchaser agree to it. https://uk.practicallaw.thomsonreuters.com/w-012-5937?transitionType=Default&contextData=(sc.Default)&firstPage=true#co_anchor_Ic78abd643ae211ebbea4f0dc9fb69570 In addition to this, there is no cancellation clause for the client to cancel for any reason. We are discussing these points now, and they have been open some small amendments so far, but these may end up being a show stopper. We have added a lot of extras including higher spec PC items, tiling, driveway, bathrooms, kitchen, scullery, electrical and there is a $70K cost for earthworks. Our total $/m2 is just under $3000 I have no experience with other builders/contracts to judge if these clauses are particularly harsh or normal and whether the total cost is reasonable. Any advice welcome.

Hi Mark, Quite a lot to digest there. Probably not worth you sending me the whole contract, because it seems you’ve already got enough to raise several red flags, so me raising more won’t solve the basic problems. And I suspect reading it would spoil my day. But I congratulate you on being wise enough to look critically at the contract before handing over any money, or signing anything. It seems a lot of people get so tied up in the plans and cost, that the contract becomes a kind of afterthought. First, as a disclaimer, I must say that I am (or was) a civil engineer by profession. So I have quite a lot of experience of managing, and to some extent writing, construction contracts. So I have a good idea of what I expect to see, and don’t want to see, in building contracts. But I’m not a lawyer, and I think it may have reached a stage where you would be wise to consult one before signing anything. Having said that, before you do I have a few comments on what you’ve said so far, more or less starting from the bottom of what you wrote and working up: If you want to get an idea of what a reasonable contract looks like you could check out NZ Standard 3902:2004, or the NZ Institute Of Architects Small Works Contract. There are others available if you want to do more research. When you consult a lawyer these might help with what questions you need to ask. The last (and frankly the only) house we built in NZ was in Auckland in 2015/16, but from that experience, from various comments I’ve seen, and experience of a friend currently getting quotes, I’d say $3K/m2, for a reasonably conventional design (ie not very architectural), but with all the stuff you mention included, sounds about right. But I’m sure someone will come on here, and claim to have done it for half the price! A building contract with no provision for the Client to cancel for any reason sounds unbelievable, and I’m not even sure it’s valid in law. Of course they can try it on to see whether anyone falls for it. I didn’t read through the whole of that link you gave, but in it under Sources Of Law, CGA, I spotted ‘Parties cannot contract out of the CGA, unless they are both in trade, where they agree in writing to contract out, and it is fair and reasonable to do so.’ I assume you’re not ‘in trade’, so I can’t see how it can be fair and reasonable for you to give up all your rights under law. I suggest you also check Consumer Protection for Building Work, implied warranties under the Building Act, and minimum/implied contract requirements for building work over $30K. Why on earth would any client want to agree to the clause about the builder’s maximum liability being $130K? Obviously problems with a seriously defective building could easily cost more than that. Again, I suspect it’s not even legal in a residential contract. Similarly with the weird (and I suspect written by a builder himself) clause about negligence etc. They might get away with this in a commercial contract, but I think not in private residential construction. Possibly they can try to exclude some of the stuff about rent, accommodation and travelling expenses. But if you have a clause (which I assume you don’t) about payment to you of Liquidated Damages/per day for delayed completion, then things like rent for alternative accommodation might be one of the things taken into account in assessing that. Obviously some quite interesting technical and legal questions raised here. Maybe we’ll get lucky, and a construction lawyer will comment (free of charge of course).

Hi Mark I hope you get on OK with GH Tauranga – I have to say that GH are extremely reluctant in my experience (built with them up in Auckland and down in SI) to amend anything in their contracts – was pretty much told “like it or leave it” when I asked to make changes based on what my solicitor said and they were only minor not very important things. Also note comments regarding Golden Homes “Guarantee” which at the time I built was extremely limited and is underwritten by pretty much the same company. They may have changed this I don’t know. I had a horrible experience with Chch GH franchise but understand they have now changed hands and have heard good things about the new people. What I would suggest is to try to find people who have built with GH Tauranga and guage their experience both with the quality of the build and cost overruns etc. 🙂

Hi All, I have mentioned this before but will say again. When getting contracts reviewed by a layer it is critical that a specialist construction lawyer be used. Using a generalist legal firm is a complete waste of time in my experience. I used a generalist to review my extremely one sided Signature Homes contract and they told me it was all good. A couple of years later when trying to dig myself out of a massive hole I engaged a specialist (Matt Taylor in Auckland). He was extremely helpful in helping me to navigate my way back to a reasonable settlement. Very happy to recommend Matt and team.

Hi Mark, I totally agree with Chris on this. I’ve said something similar before myself, but I guess I should have said it again. Most lawyers here claim to understand construction contracts, but when I consulted a couple I found that not all do. Fortunately I knew enough to realise that, which is why I suggested you look at the Forms I mentioned, so you can ask more informed questions. Perhaps not necessary if you consult the lawyer Chris has mentioned. Although of course, in the nature of things, the very builders who have a poor contract to start with are the ones who are generally most reluctant to change it. So even though your lawyer suggests all sorts of wonderful changes, you’ve wasted your money if the builder just rejects them all. (One of the franchise builders I had discussions with said the owner of the franchise does not allow them to alter their contract.) So perhaps you could ‘test the water’, by trying to assess the extent to which the builder is willing to make any changes at all, before spending money on legal fees. For example try asking whether they’re open to using a completely different contract (eg like NZS), or maybe just try lifting a ‘Cancellation by Client’ type clause from one of those contract forms I mentioned (or even the Master Build contract), and ask him why he doesn’t have a clause like that. Good luck.