Red flags to look out for when hiring a Contractor...

Undertaking building works can be stressful so it’s important to ensure you choose a reputable building contractor. Rather than relying on legal remedies after something goes wrong, it is best do your due diligence beforehand to minimise problems occurring.

Here are some tips on what to look out for before hiring a contractor:

1. Reviews: We recommend conducting a background check on a builder by asking for references and checking online reviews. While a few bad reviews may not necessarily reflect their overall performance, it is best to proceed cautiously.
2. Registration: To complete certain restricted works under the Building Act, builders must be registered as licensed building practitioners (LBP). You can check if a contractor is registered by looking on the LPB register here.
3. Insurance: Builders should have professional indemnity and public liability insurance policies in place depending on the nature of the work they are engaged to carry out. The builder will generally require you to take out a Contract Works policy during the period of construction. Make sure you check what policies the builders hold and what policies you are expected to hold and ensure the cover is adequate for the risk. If the builder is a registered master builder, you can obtain an additional form of insurance by purchasing a Master Build Guarantee.
4. Deposits: Contractors typically receive credit from their suppliers and do not have to pay for supplies in advance. If a builder is asking you to pay a deposit, this can be a red flag that they have credit issues. Best practice is to avoid Contractors requiring a deposit particularly if it represents a large proportion of the Contract Price. If you are unable to find a Contractor who does not require a deposit, it pays to ensure there are additional protections in place to protect you if the builder goes bust.
5. Pricing: We recommend obtaining multiple quotes for the proposed work so you can compare pricing. If one of the quotes is significantly higher or lower than the others, then this could indicate something is amiss.
6. Contract: Ensure that you have a compliant written building agreement as detailed here. It is important to include any necessary information such as time frames and plans to help to prevent any disputes about what “completed works” will look like.

It is important to engage a contractor you trust and with whom you feel you have a good working relationship. Doing due diligence is the first step to ensuring that you protect yourself. If you have any concerns, make sure you get legal advice before signing a contract.

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