New purchase agreement tackles building reports

The latest version of the Auckland District Law Society and Real Estate Institute of New Zealand sale and purchase agreement, used for most of the country's real-estate transactions, has become available this month.

It requires that any building report is done by someone suitably qualified and enables vendors to request a copy of the building report.

Barrister and solicitor Peter Nolan, who helped draft the agreement, told the Herald on Sunday the stricter requirement was protection for both purchaser and vendor.

"It needs to be objective. It needs to be fair to the vendor that if the buyer is pulling out on the basis of a building inspection that it was done by an objective person with proper qualifications."

But the directive has created problems and the Certified Builders Association has warned members not to do building reports because the risk of liability is too high.

Operations manager Jason McClintock said there had been too many cases of things such as leaky buildings where the person who wrote the inspection report was the "last man standing" after developers went out of business.

Awareness of leaky building problems had made homeowners more litigation-savvy. "Practitioners are exposed to liabilities they are underinsured for," said McClintock.

"We're protecting both parties by saying builders shouldn't expose themselves, their homes and their businesses to potential liabilities."

Master Builders Association chief executive Warwick Quinn agreed: "Under the building regime we are responsible for undertaking construction work. Our liability increases significantly if we undertake consultancy work."

He said that was the domain of registered surveyors. He expected building inspection companies would do the bulk of the inspection work.