Building: Prevention is better than cure

Date: 2008-09-25

Nobody is better equipped to give you advice than a person whose home is currently a construction site. Yes, I’m talking about me. Once the contractors move onto a site, it is a fruitless exercise reflecting on what could have been done, which contracts should have been in place and who might have been appointed.

Identifying a reputable builder

Step 1: Who better to recommend a builder than your friends, family or associates who have had a pleasant experience? Not only do you trust their judgment, but you will also be able to view the standard of workmanship.

Step 2: Contact the Master Builders Association or National Home Builders Registry Council (NHBRC) for a contractor in your area.

Step 3: Do not only obtain, but personally contact as many references as possible. Insist on references that are older than a year, as many problems only surface once the contractors have left the site.

Step 4: Obtain at least two tenders and compare prices before deciding on which one to accept. Don’t always go for the lowest tender, but find out why one is cheaper than the other.

The tender

A detailed tender is as important as a well-constructed contract. Your building tender must have a detailed breakdown and price allocation for each item, including an NHBRC unit enrolment certificate, materials to be used and rubble removal.

Using painting as an example; have a separate quote for the cost of the actual paint and labour. Should you in future wish to change a specific item, you will know exactly what will be affected and where you can save. Should a dispute arise, this will be a good point of reference to establish the expected result and the cost thereof.

Should you be using a building loan, the bank’s valuator will utilise the tender, among other documents, to ascertain the added value to the property, enabling the bank to grant you the required facility.

Always ensure that VAT or the exclusion thereof is clearly annotated on your tender or quote.

The contract

Don't ever rely on good faith. Everything must be in writing. Ensure that your contract includes:

• Contract price and the schedule of payments – Most contractors will require some form of a deposit, but limit this to 10% of the total contract price. Always retain at least 10% until the work has been fully completed and certified by the local authorities, the NHBRC, the bank or a competent person of your choice.

• Commencement and completion dates – Specify which measures will be taken should the contract not be completed according to schedule. You are within your rights to charge penalties. You may also claim damages, such as loss of income or unbudgeted expenditure caused due to a delay.

• Handling of a breach of contract or a dispute – Many contracts make provision for arbitration, but this could be delaying tactics. A threat of court action produces more rapid results.

• Guarantees by the contractor, including rectifying any defects within three months of completion of project.

• Confirmation that your contractor has an all risk and liability insurance cover.

Other musts and must nots

• Always keep a copy of your municipally approved plans.
• Don’t make any payments outside the agreed schedule of payments.
• Keep a log book of the weather conditions, in case your contractor blames the weather for delays or damages.
• Only allow extras to be carried on written instruction.
• Before you do your final payment, obtain an electrical compliance certificate, a roofing certificate (where applicable) and a sewerage and plumbing certificate from your local authorities.
• Keep a copy of each invoice and payment, as this forms part of your base cost in calculating your capital gains tax liability.

Valuable contact numbers

NHBRC: 011 317 0000 / 0800 200 824
Master Builders Association: 021 462 2690
Electrical Contract Association: 021 462 2690

For a free building contract, visit www.freelegaldocs.co.za or obtain one from the Master Builders Association.

For assistance with your building loan, contact us on 0861 106 306/5.

While it is best that all issues are properly ironed out prior to contracting a builder, all is not lost if a proper contract is not in place. As soon as a person agrees to do a job and another agrees to pay for it, a contract is legally in place, even if it’s not in writing. Furthermore, according to Legal City (www.legalcity.net), common law, National Building Regulations and the Building Standards Act of 1977, “require a contractor to work in a competent and professional manner, that sound and proper materials should be supplied and that the structure should be fit for the purpose for which it was intended”. But for your own peace of mind, negotiate the terms and conditions prior to having to enforce them.

Tess Rodrigues
Managing Director

Building: Prevention is better than cure

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