Scheme aims to sort renovation wrangles

An Auckland building disputes arbitrator has started a new system to protect people involved in house construction and renovation.

John Green of the business Building Disputes Tribunal said his new Buildsafe system would help home owners and contractors.

Both parties were at risk during renovations or construction of a new house and he said disputes involving millions of dollars could be avoided.

Buildsafe was a security of payment scheme, he said, and would be introduced on September 2.

"Many building projects fail and for many varied reasons. Contractors take a deposit and run, owners' expectations are unrealistic, poor planning, contractors go bust, owners go bust, shoddy work, owners who won't or can't pay.

"The result, however, is always the same: the whole exercise ends up being a hugely stressful and most unpleasant experience for all involved and sadly and all too often, a financial disaster from which many will never fully recover," Green said.

Under Green's system, Buildsafe would hold money paid by the owner to the contractor in a trust account.

Buildsafe would act as a fair, independent and neutral third party with no financial interest in the job or liability, Green said.

The business would ensure funds were available for the work.

It would also attempt to resolve disputes fairly and quickly, Green said.

"It is not difficult to understand why disputes and disasters are a natural consequence.

"We see contractors take large deposits never to be seen again or they start a project and then abandon the work part way through for easier pickings elsewhere.

"There are disputes about the quality of work, the time taken for the work and the cost of the work or the contractor goes bust part way through the job."

But homeowners were also to blame, he says.

"Owners pay contractor's accounts late, make unjustified deductions from their claims or they simply run out of money to pay for the work ordered when mortgage monies are used to purchase unrelated items such as cars, boats and holidays, or when costs escalate as unplanned variations are ordered and more expensive fittings and finishes are chosen," Green said.

The Homeowners and Buyers' Association, run by John Gray and Roger Levie, also has a service to assist people draw up contracts and let tenders for building repair and construction.

Gray said the repair of leaky buildings was fraught with difficulties and it was crucial to secure the right consents and structure contracts and payment schedules correctly.

He said the association now employed specialist barristers and lawyers to assist homeowners to get this part of the process right and deal with territorial authorities, builders and subcontractors.

Gray called for a major shakeup of the Construction Contracts Act.

"It simply fails to deliver for the majority of owners who are affected by shonky builders. I have serious concerns about the competency and motivation of some of the arbitrators," he said.

Creating new systems to protect contractors and homeowners was the wrong approach, he said.

"It is the ambulance at the bottom of the cliff to a certain extent but it is one of the many parts of the overall scheme that needs to be put in place to protect the consumer," Gray said.

"I know it goes both ways in terms of builders needing this protection also, but it would be nice if they engaged with a consumer group so that we got an understanding of what owners need."