Real Estate & Construction
Land, and what gets built on it.
Development is two jobs that have to agree with each other. First the land — whether it can carry what you intend, and what the council will require before it does. Then the building — the contract, the money, and who carries the risk when something goes wrong.
Most of the pain in this work comes from the second job being signed before the first one is finished.
The land
What to establish before you are committed.
- Zoning and what it permits — what you can build, at what height and density, and whether what you have in mind needs a resource consent or is simply not available.
- Existing consents and their conditions — what has already been granted, what it obliges, and whether it is still live.
- Services — whether water, wastewater and power can reach the site at a cost you have actually budgeted for.
- Ground conditions — geotechnical reports, flooding, and land stability. These change what a build costs more often than design does.
- Contamination — previous use of the land, and whether it sits on the register of potentially contaminated sites. Remediation is expensive and it is discovered late.
- Title constraints — covenants limiting what you can build, and easements running through where you intended to put it.
A due diligence condition is worth only as much as the time it gives you. We set the period against what actually has to be investigated, rather than accepting the ten working days on the form.
The contract
Who carries which risk.
New Zealand construction runs largely on standard form contracts, and they are standard only until someone amends them. The amendments are where the risk moves, and they are usually presented as minor.
Variations
How a change to the work gets priced and approved. Loose wording here is the most common route to a final account that bears no relation to the contract sum.
Time and delay
What entitles the contractor to more time, what liquidated damages apply if they run over, and whether those damages are a real deterrent or a rounding error.
Defects and the period after completion
What has to be put right, by whom, and for how long after the work is finished.
Security
Bonds, guarantees and insurance — who holds what, and what it is actually worth if the contractor fails.
Residential building work
Building work on a home carries its own requirements, including a written contract and disclosure above a prescribed value, and warranties implied by statute that cannot be contracted out of.
The trap
A payment claim you do not answer becomes a debt.
Under the Construction Contracts Act, a payment claim must be answered with a payment schedule within the time the contract allows. If it is not, the amount claimed becomes payable — whatever you think of the work.
Arguing about it later does not help
The point of the regime is to keep money moving down the chain. Once the time has passed, the merits of the claim are not the question; the failure to respond is.
It can be enforced quickly
An unanswered claim can be pursued as a debt, and the usual defences about quality or progress are not available to you in that proceeding.
So the system matters more than the dispute
Whoever handles your invoices needs to know what a payment claim looks like and what the deadline is. This catches out developers, head contractors and homeowners alike.
Retentions
Held on trust, not held in the account.
Where money is retained from a subcontractor against defects, it is trust money. It has to be held properly and accounted for, and the obligations are stricter than many parties on both sides realise.
For subcontractors, this is what stands between you and an unsecured claim if the party above you fails. For developers and head contractors, getting it wrong is a personal and expensive problem, not a bookkeeping one.
Buying off the plan
You are buying a promise with a deadline attached.
Off-the-plan contracts are written by the developer and they are not neutral. Three things decide whether one is safe to sign.
- The sunset clause. The date by which the development must be finished, and what happens if it is not. If the developer can cancel and resell in a risen market, you are carrying the price risk and they are taking the benefit.
- What they can change. Most of these contracts allow variation to the design, the materials and the unit boundaries. The question is how far, and whether you can walk away if it goes beyond that.
- Your deposit. Where it is held, whether it is released to the developer before completion, and what you recover if the project does not finish.
We read these before you sign, and tell you plainly which clauses are ordinary and which ones put you at the developer’s discretion.
When it goes wrong
Adjudication first, usually.
Construction disputes have their own fast process. Adjudication under the Construction Contracts Act produces a decision that binds the parties straight away and keeps the project moving, even if the matter is later argued elsewhere.
It is quick, which is its virtue and its risk: the timetable is short and the party that is better prepared when it starts tends to do better out of it.
Alongside that sit defective work claims, statutory warranties on residential building work, and the long-stop period after which building claims can no longer be brought at all — which is why a defect noticed and left is a defect that may become yours.
How we can help
We can assist with the following.
- Development land: due diligence before you are committed, and setting a condition period that is long enough to do it in.
- Construction contracts: reviewing and negotiating standard form contracts and the amendments made to them.
- Payment claims and schedules: getting the process right, and responding when one arrives.
- Retentions: compliance for those holding them, and recovery for those owed them.
- Off-the-plan contracts: reviewing sunset clauses, variation rights and deposit arrangements before signing.
- Subcontracts and the terms passed down the chain.
- Adjudication and defect claims, and the steps to take before either becomes necessary.
- Consents and conditions carried through to completion and sale.
Questions
Frequently asked questions.
What is a payment claim, and why does it matter so much?
It is a formal claim for payment under the Construction Contracts Act. If you do not answer it with a payment schedule within the time allowed, the amount claimed becomes payable — regardless of what you think of the work.
It is the single most common and most expensive mistake in New Zealand construction, and it is an administrative failure rather than a legal one.
Can I withhold payment because the work is defective?
Only if you say so properly and in time, in a payment schedule that sets out what you are withholding and why. Silence is not a dispute; it is an acceptance.
Is a standard form construction contract safe to sign as it is?
The standard forms are reasonably balanced. The versions presented to you usually are not — they come with a schedule of amendments, and that is where the risk has been moved.
The amendments are the part worth paying someone to read.
What is a sunset clause?
The date by which an off-the-plan development has to be completed. If it is not, the contract can usually be cancelled.
The question is who gets to cancel. If the developer can walk away and resell into a higher market, you have carried the delay and they have taken the gain.
Can the developer change what I am buying?
Most off-the-plan contracts allow changes to design, materials and unit boundaries. Some allow a great deal. What matters is how far they can go before you are entitled to pull out.
Where does my deposit sit until completion?
It depends entirely on the contract. Sometimes it is held in trust until settlement; sometimes it can be released to the developer along the way. Know which before you pay it.
What are retentions and why are they treated differently?
Money held back from a subcontractor against defects. It is trust money, with obligations about how it must be held and accounted for, precisely because it used to disappear when the party above failed.
How long do I have to bring a claim about building work?
There is a long-stop period after which building claims cannot be brought at all, however good the claim is. It runs from the building work rather than from when you noticed the problem.
Which is why a defect you can see is a defect worth advice on now rather than later.
What is adjudication?
The fast dispute process for construction, run under the Construction Contracts Act. The decision binds the parties immediately so the project can carry on, even if the dispute is argued again later.
The timetable is short, so preparation matters more than it does in most forums.
How much due diligence time should I ask for on development land?
More than the standard ten working days, usually. Geotech, contamination and service capacity cannot be investigated properly in a fortnight, and the condition is only worth the time it gives you.