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The following article was written by Alan Prescott

Spec Builders Beware

There has been a lot of publicity about the recent change to the Building Act which makes written building contracts compulsory for all residential building jobs with a value over $30,000. 

The act introduced a range of consumer protection measures which apply when a builder agrees to undertake residential building work for a client.  If a builder fails to comply he is potentially subject to a fine. 

Whilst many of the new protections do not apply to a spec builder, building a home for on sale when completed, it has not been well publicised that new warranties implied by the act do apply to spec builds. 

The warranties apply to every spec build.  The spec builder is unable to contract out of them.  The benefit of the warranties also pass to any subsequent owner who has purchased from the original purchaser.  The warranty period can be up to 10 years. 

In some circumstances the owner can claim damages from the spec builder or have remedial work completed by another builder and charge the spec builder for that work. 

There are some limited exclusions and there is some ability to clarify the limits of the implied warranties.  It is very important that spec builders include additional clauses in their sale contracts to take advantage of this. 

Make sure you contact us for advice before you sign any contract for the sale of your spec build.

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