Renovation Tip #9

Have a contingency fund for unexpected costs or unforeseen occurrences

Remember with most renovations there are often hidden problems that only come to light when the wallboards come off. Bathrooms are particularly vulnerable to issues around water leaks, but the Leaky Homes issue in recent years has shown that leaks are not limited to this area. Poor quality materials and or workmanship in previous renovations or even the original build may have severe consequences for the work you are planning.

These are things you may be mentally and emotionally prepared for but when the reality knocks on your door and your exceeding well over your budget, things may be different and difficult to remedy. Keep in mind that sometimes renovation projects don’t run efficiently where nasty surprises can occur, so it is important you have a contingency in your budget.

Hope for the best, but plan for the worst
A contingency plan is a plan devised for a specific situation when things could go wrong. Contingency plans are often to deal with potential issues and to be prepared for anything that could happen during the building process.

By having a contingency in your budget it aids in solving unexpected and unforeseen problems during the renovation build, it is better to solve issues as soon as possible so the project can remain on track and completed within the set deadline.

Keeping in mind that renovating or adding to your house can be a sensational and very rewarding experience. You already know the good and bad points to your home. If you like where you live then improving the house you already know so well can dramatically improve your quality of life and improve its overall capital value.

The Building Amendment Act 2008 has added some building work to the list of items that are exempt from requiring a building consent, however, any work must still be carried out within the regulations of the building code. It is highly recommended that if your level of building capabilities is only average, then having professionals help or finish the job can make a huge difference to the quality of the end result.

The purpose of this Building Amendment Act is to provide owners guidance to building constructions on how to meet the requirements of the Building Act 2004 relating to building warrants of fitness, compliance schedules and other related matters.

This guidance is principally related to the owners of any building that is not a stand-alone house (unless the house has a cable car) because the owner is held liable for certifying any specified systems and continue to ensure the building is safe for people to enter, inhabit or work in.

This guidance mainly covers:

• • How a compliance schedule is established and developed
• • The building warrant of fitness process Altering a compliance schedule
• • Useful information when buying a building with a compliance schedule

There are three scenarios that deal with existing compliance schedules.

They are:

• • A building with an existing compliance schedule
• • An alteration to a compliance schedule generated by a council decision, the owner’s request or on the recommendation of an independent qualified person
• • An amendment to a compliance schedule triggered by a building consent

For the purposes of clearness and rational sequencing, this document is designed to follow the early stages of a new building with detailed systems from design, construction, occupation, through to on-selling the building. The clarification focuses mainly on matters connected with specified systems, compliance schedules and building warrants of fitness, and not on the building consent process.

For those building owners who are still unclear about what is required under the Building Act after reading this guidance, it is highly recommended that they find appropriate professional advice – such as an independent qualified person or local council’s building control department.

The Building Act 2004
The Building Act is the main section of legislation governing buildings in New Zealand. It sets and points out the requirements for the construction, alteration, demolition, use and maintenance of new and existing buildings. The Building Act’s purpose is to guarantee buildings are safe and built right by following the guidance regulations. It is managed by the Department of Building and Housing and is structured locally by regional, city and district councils.

Under the Building Act, the New Zealand Building Code states the bare minimum standards buildings must meet for the whole area of NZ.

The Building Act also requires the owner of a building with specified systems (such as sprinklers, lifts, fire alarms) to have a compliance schedule and to provide the council with a yearly building warrant of fitness to confirm that the building’s specified systems are being upheld and are functioning efficiently.

Explanation of terms

Building consent:
An approval issued by a building consent authority (the building control department of the district, city or regional council) to undertake building work in accordance with the approved plans and specifications.

Code compliance certificate:
A certificate issued by a council, at the completion of building work, confirming that the council is satisfied on realistic grounds that the building work undertaken complies with the Building Code and approved building consent.

Commercial building:
A building or use of a building where any natural resources, goods, services or money are either developed, sold, exchanged or stored. For example: a bank, car-parking facility, computer centre, office, restaurant, shop, showroom or storage facility.

Compliance schedule:
A document issued by a council for buildings containing specified systems. The compliance schedule states the specified systems, their performance criteria standards and includes the examination, maintenance and recording processes needed to keep them in good working order.

Compliance schedule statement:
A written statement issued by a council as temporary public notification of the specified systems covered by the compliance schedule for a building and where the compliance schedule is kept. It is not a statement about the performance of the specified systems listed. It is required to be publicly displayed for 12 months from the issue of the compliance schedule. It is then replaced by the first building warrant of fitness.

Council:
A district, city or regional council having the jurisdiction over the area where a building is located. Most councils are also building consent authorities that issue building consents, code compliance certificates and compliance schedules.

Form 11 – Application for amending a compliance schedule:
This form is used to officially direct the council of any change compulsory to a compliance schedule.

Form 12 – Building warrant of fitness:
A written statement issued annually to the council, a copy of which is also publicly displayed in the building. The building warrant of fitness is a declaration by the building owner, or the building owner’s agent, that all the specified systems in the building have been inspected, maintained and reported in accordance with the compliance schedule for a period of 12 months prior to the issue date.

Form 12A – Certificate of compliance with inspection, maintenance and reporting procedures:
This form is used as a confirmation that the examination and maintenance processes under the compliance schedule have been met to a satisfactory standard. Each independent authorised person who undertook examination or maintenance of the building’s specified systems issues them.

Independent qualified person (IQP):
A person or firm approved by a council as qualified to inspect, maintain and report on specified systems.

Inspection and maintenance reports:
Annual written reports that are kept with the compliance schedule for at least two years. This contains log books and test certificates.

Performance standard:
The level of performance a specified system was projected to meet, and to continue to meet, at the time it was designed and installed in a building.

Resource consent:
A document issued by council giving town-planning approval for certain activities and buildings on a property.

Specified systems:
Specified systems are systems or qualities that contribute to the suitable running of a building. Specified systems involve continuing inspections and maintenance to certify they function as required, if they fail to operate properly and appropriately they have the potential risk to harmfully affect health and life safety.

Third-party verification:
A procedure a council can use for getting an independent party to verify that a specified system has been fitted and is functioning to the mandatory standard so they can be satisfied on realistic grounds that the work complies with the Building Code and the performance standard specified in the design. Verification might include installation certificates, commissioning results and test reports.

The responsibilities of building owners
If you own a building that contains specified systems the Building Act requires you to have a compliance schedule and you must certify the effective procedure of all the specified systems for the life stages of the building. This requirement does not apply to residential homes unless they have a cable car. This is accomplished by continuously meeting their particular performance standards and all the examination, maintenance and reporting requirements of the compliance schedule issued by the council.

To help guarantee your accountabilities have been met, the Building Act requires you to sign, issue and publicly display an annual building warrant of fitness and provide a copy annually to the council whose district the building is in.

It is also your duty to maintain the compliance schedule in a location designated on the compliance schedule statement and building warrant of fitness, and other documents are freely available for examination by authorised individuals. These include annual written reports, log books and test certificates that are to be filed and organised for at least two years with the compliance schedule.

Building consent issued
When issuing a building consent, the council must state whether the building requires a compliance schedule. Where the building requires a compliance schedule, the council must state the specified systems and the performance standards the systems must meet.

The building consent should also identify what documentation the applicant is required to provide to the council when construction is complete and before a code compliance certificate will be issued. This certification may include certificates from installers of specified systems, testing and commissioning results, and third party verification from a qualified inspection bodies for fire alarms and sprinkler systems as required by New Zealand Standards.

Building work completed and compliance schedule issued with the code compliance certificate

During construction, the building contractor will request the council to undertake the inspections specified in the approved building consent.

When all building work is finished the building owner is required to make an application to council for a code compliance certificate – the council will then commence a final inspection. With this application the following information may be required to be provided in relation to specified systems.

Installation certificates from subcontractors who installed the specified systems authenticating that the work has been completed in agreement with the building consent and the applicable standards.

Evidence that specified systems are proficient of performing to the performance standards set out in the building consent.

Once the council is satisfied that the building work has been completed in accordance with the approved building consent and the Building Code, it will issue the compliance schedule (or amended compliance schedule) with the code compliance certificate.

Building warrant of fitness issued
Annually, on the anniversary of the issue of the compliance schedule, you as a building owner (or your agent) must sign and display a new building warrant of fitness verifying that the requirements and regulations of the compliance schedule have been met to a satisfactory standard for the previous 12 months.

You must display a copy of the building warrant of fitness in a place in the building where all individuals who inhabit the building can publicly see it. Although not required by the Building (Forms) Regulations 2004, the building warrant of fitness should classify the specified systems in the building. The Department believes that it is good practice to include this information.

You must also supply a copy of the building warrant of fitness to the council along with:

• • A copy of Form 12A completed by each independent qualified person who inspects specified systems in your building.
• • Any recommendations from an independent qualified person to alter the compliance schedule.

The council will retain the building warrant of fitness and relevant documents from the independent qualified persons on record for the life of the building. You are also required to keep all the Form 12As and examination and maintenance reports for at least two years after they have been issued. The forms and reports must be kept with the compliance schedule at the location stated on the building warrant of fitness.

You must produce the inspection and maintenance reports when required by the council and any other person or organisation that has the right to inspect your building under any Act.

Amendment triggered by a council decision, owner’s request or IQP recommendation

A council may adjust a compliance schedule where:

• • The owner requests an alteration to the compliance schedule
• • The owner’s independent qualified person (IQP) recommends that the compliance schedule is rewritten, to certify the specified systems will perform to the performance standards for those systems
• • The council elects that the compliance schedule needs to be changed, to ensure the specified systems will perform to the performance standards for those systems

Where an independent qualified person or the council recommends an amendment to a compliance schedule, you have the right to deliberate with the council before the council makes its decision on whether to consent or decline the recommendation.

The application for an amendment to a compliance schedule, where initiated by the owner (or their agent), must be made on Form 11, which should be available from the council.

In some cases older compliance schedules may be modernised to support with the arranged specified systems under the current Building Act, rather than the Building Act 1991. The council may take the opportunity to examine, evaluate and possibly alter these compliance schedules to ensure they precisely reflect all the installed specified systems.

Amendment triggered by a building consent
When building work affects a specified system, an application must be made to the council for a building consent. The council may also amend the compliance schedule where the work:

• Will affect a current specified system and require altered examination and maintenance requirements
• Will result in a new specified system being installed
• Will remove an existing specified system

The amended compliance schedule will be attached to the code compliance certificate once the work is completed in accordance with the building consent and the Building Code.

Useful information when buying a building with a compliance schedule
It is vital for a potential purchaser to do required research and evaluation before thinking about purchasing a building.

When becoming a new owner of a building, you are held liable for the appropriate operational functions of all specified systems within the building. The Department mentions it would be rational for any potential purchaser of a building with specified systems to confirm the building has a compliance schedule and an existing building warrant of fitness. The seller should be able to provide all these documentations; this information is also available at your local council. It is also wise to ask the council to view the maintenance logs and service records for all the specified systems to certify the compliance schedule has been met to a satisfactory standard to date.

You may find it helpful to ask which independent qualified persons the seller currently uses to examine, maintain and report on the building’s specified systems since they already have knowledge and expertise on those systems. You may wish to contract the same independent qualified persons or you may prefer to get quotes and employ others.

Fines for offences
The building warrant of fitness and compliance schedule requirements in the Building Act are in place to ensure specified systems are appropriately executed and that building tenants are sufficiently protected from potential hazards that can risk their life and health.

Building owners who fail to meet these regulations and requirements may be risking the health and/or life safety of the building occupants that can potentially lead into legal matters. The Building Act and Regulations recognise that these potential risks and their seriousness, and provide a means of enforcing and impeaching or fining building owners.

The offences are:

• • Failure by the building owner to attain a compliance schedule
• • Failure by the building owner to supply the council with a building warrant of fitness
• • Failure by the building owner to display a building warrant of fitness required to be publicly displayed
• • Displaying a false or misleading building warrant of fitness
• • Displaying a building warrant of fitness other than in accordance with section 108 of the Building Act

These offences can carry a maximum fine of $20,000 and, for failure to obtain a compliance schedule, a further $2,000 for every day the offence is continued and not ratified.

Councils can also issue immediate fines varying from $250 to $1,000 for the compliance schedule and building warrant of fitness offences above.

In addition, the Building Act allows councils to issue a notice to fix where:

• • A building warrant of fitness is not correct
• • The inspection, maintenance or reporting procedures stated in the compliance are not being, or have not been, correctly conformed with

A notification to fix this is essentially a warning to correct an occurrence of non-compliance. Failure to correct the non-compliance is an offence liable to a maximum fine of $200,000 and a further $20,000 for each day the offence is continued. An instant fine of $1,000 can also be issued if a notice to fix is not complied with.

It is also an offence, carrying a fine of up to $100,000, to use or allow the use of a building for a usage that is not safe or healthy, or if it has insufficient means of escape from fire. In the case of a continuing offence, there is a further fine not exceeding $10,000 for every day the offence is continued. Instant fines of $1,500 and $2,000 can be issued for these offences.

Note: Building owners may be negotiating their insurance cover by not having a current building warrant of fitness.

Bonus Tip #10 – The Build Plus Renovation Checklist

> Learn the 22 must-have thinks you need to check before, during and after your renovation project to ensure a successful outcome