NZCB Building Contracts continued...

Otherwise, you would be up to 2:00am every night instead of just midnight.

Commercial building contracts impose very strict procedural requirements for claiming variations. If you don’t comply with those requirements, you do the variation for free. Large construction companies can manage that risk because they employ project managers and quantity surveyors to take care of it. Small-medium residential building companies don’t have those resources. They also know that many variations on residential projects are agreed to informally, on the spot. That’s why NZCB Building Contracts say you get paid for a variation whether or not you documented and priced it ahead of time, as long as it was a genuine variation that the homeowner requested or benefitted from.

12. Removal of the requirement to pay disputed sums into trust or escrow

11.

The same principle applies to an extension of time. Large construction companies can churn out the paperwork; you can’t. If you have been held up by causes beyond your reasonable control, you get an extension of time regardless of whether you submitted a formal written claim or not.

The requirement for the homeowner to pay disputed sums into escrow, is to counter the cunning strategy of unscrupulous homeowners that I mentioned at the outset – namely to wait until the job is finished, and then not pay the final invoice. That is a self-help remedy that is decidedly unfair, because the homeowner’s grievances may in fact be unjustified or based on false assumptions. The intention behind the escrow provision is to deprive both parties of the disputed money so they are both feeling the same pain and they each have the same incentive to resolve the dispute. I don’t see how anyone could reasonably argue against that.

Geoff Hardy is a partner in the Auckland law firm Martelli McKegg Lawyers and is a construction law specialist. Geoff also operates the Business Related Legal helpline for NZCB members, contact Geoff on 09 379 0700 or geoff@martellimckegg.co.nz for 20 minutes of free advice. This article is not intended to be relied upon as legal advice.