The Building Act 2004 came into force on 31 March.

Of particular note, are new provisions which mean that it is an offence for a residential property developer to complete the sale of a household unit or to allow a purchaser to enter into possession of that unit before a Code Compliance Certificate (“CCC”) is obtained.  There is a $200,000.00 penalty for this offence.

The Act defines a residential property developer as a person in trade who for the purposes of selling a household unit –

• builds the household unit or
• arranges for the household unit to be built or
• acquires the household unit from a person who built it or arrange for it to be built.

This provision will apply to all sale and purchase agreements signed before or after 31 March 2005 where settlement or possession takes place on or after 31 March 2005.

It is possible for a developer to contract out of these provisions, however to do so they must use the prescribed form which includes a warning to purchasers of the possible consequences of signing such a contract.  These forms are available on the Building Act website at www.building.govt.nz.

It is also now an offence to let the public use any part of a building intended for public use and affected by building work without a building consent and a CCC.  Once again, the fine for breach of this provision is $200,000.00 and a further fine of $20,000.00 per day may be incurred for continuing breaches.

A building is intended for public use if it is intended to be open to the public, or is used by the public, whether for free or on payment of a charge.

These provisions may catch not only owners of buildings but potentially also tenants of buildings, e.g. retailers.  These provisions mean that, for example, a tenant who undertakes building work during the term of its lease which requires a building consent will not be able to continue to trade from the premises until such time as a CCC is issued.

The Act expressly makes directors and managers of companies potentially liable if they knew or could reasonably be expected to have known that the offence was to be or was being committed and failed to take reasonable steps to prevent the offence from being committed. 

The Act also makes directors and managers liable for any offence committed by the agents or contractors.