Do you need a builders report?

There is no legal requirement to get a builders report when you buy a house in New Zealand. Whether to get one is your decision, and it helps to know what the report covers and who else is looking at the property.

A builder’s report is a written report on the state of a house, from someone you hire and pay yourself. It is a private deal between you and them, so what it covers is what you agree.

The reason to arrange one yourself is that nobody else in the sale is checking the house on your behalf. The real estate agent does not have to go looking for problems. The council’s records show whether the council approved building work, which is narrower than whether the house is sound. A report the seller has already paid for gives you little protection if the inspector misses something.

Each of those is worth understanding, and so is how to make a report a condition of your offer.

What the agent has to tell you

Real estate agents work to a set of conduct rules, and those rules say less about defects than many buyers expect. An agent “is not required to discover hidden or underlying defects in land”.² They do have to tell you about problems they already know about.

There is an exception, and it is worth understanding how it works. Where a competent agent would think a property may have something hidden wrong with it, the rules require one of two things. The agent can tell you about the risk, so that you can go and get expert advice. Or the agent can get confirmation from the seller, supported by evidence or expert advice, that there is no defect.

If the seller provides that confirmation, the agent has met the rule without telling you anything.

An agent must also stop acting for a seller who instructs them to withhold that kind of information.

The agent works for the seller, who pays them. The rules still give the agent duties towards you as the buyer, and those duties stop short of inspecting the house. They also apply only to licensed agents, so a private sale has none of this in it.

The same rules describe your side of it. A buyer “is expected to inquire into risks regarding a property and to undertake the necessary inspections and seek advice”.² The rules add that an agent must not simply fall back on buyer beware.

Reports paid for by someone else

Sometimes a report already exists. The seller may have commissioned one before listing, or the agent may have a recent one on file.

Either way, the inspector worked for whoever paid them, not for you. If they missed something that later costs you money, ask your lawyer whether you have any comeback. The same goes for a report the agent hands you.

A report like that can still be useful reading. It is not a substitute for one you commission yourself.

Choosing an inspector

If you decide to get a report, you choose and pay the inspector yourself, so it is worth taking some care over that choice.

If your offer depends on the report, the standard form sets a minimum. That is the agreement the Law Association and the Real Estate Institute publish. A suitably qualified building inspector has to write the report, in good faith and using accepted methods.¹

Three things are worth asking an inspector about:

• Whether they work to NZS 4306:2005, the building inspection standard, so you know what the inspection covered.
• Their qualifications and experience, because the form only says “suitably qualified”.
• A good level of indemnity insurance, which is what you would claim against if the inspector misses something expensive.

Asking a builder you know to have a look is a different thing. If your offer depends on a report, a quick look from a friend may not count as one.

What the council’s records show

Councils hold records of building work done on a property. Those records cover a narrower question than whether the house is sound. They show whether the council approved building work, and whether it signed the work off afterwards.

If you are buying a flat or an apartment, there is a third source. The seller has to hand you a written report on the shared parts of the building before you sign. It covers what the owners already know about leaks, earthquake risk and other defects.

Two documents matter here.

A building consent is written permission from the council before most building work can start, confirming the plans meet the Building Code. Doing building work without one, where one is required, is an offence.³

Work done without a consent can become the new owner’s problem. If a council decides on reasonable grounds that someone has broken the Building Act, it must issue a notice to fix. The owner of the building is one of the people that notice can go to, and the Act gives failing to get a consent as its own example.⁴ By the time a council looks at it, the owner may be you.

A code compliance certificate is official confirmation from the council that finished building work matches the building consent that was approved for it. Only the council that issued the original consent can normally give you this. A council issues one once it accepts, on reasonable grounds, that the work complies with its consent.³

So the certificate records what the council accepted about that work on the day it signed it off. It says nothing about the condition of the house now.

If a deck, a bathroom or any other work has no consent or certificate, raise it with your lawyer before you sign. Councils also sell a report on what they hold about a property, which is a separate thing again: see what it costs to check a house.

Making it a condition of your offer

You do not have to pay for a report before you make an offer. You can make the offer depend on one instead, so that the sale only goes ahead if the report satisfies you.¹

What that gives you depends on the wording. Your agreement may be on a different form, or someone may have changed it. On the standard form, three things are worth knowing.

How long you have. You write a date for the report on the front page. If you leave it blank, you have 15 working days from the date of the agreement.

Whether a poor report lets you withdraw. It does if the report is not satisfactory to you on a fair, objective view. Simply disliking it is not enough.

Whether the seller can see it. If you pull out over the report, you have to give the seller a copy straight away if they ask.¹

Your lawyer should read the condition before you sign.

Other things to check

Three things are worth checking for yourself.

What a report costs. Prices vary between inspectors, and no official body publishes a figure, so it is worth ringing a few.

Whether your bank wants one. That is a lending question, and this site does not cover lending.

Whether this particular house needs one. A listing will not tell you, and that is the question an inspection answers.

What to ask your lawyer

1. Who paid for this report, and does it protect me?
2. If the report finds something, how long do I have to pull out, and what do I have to give the seller?
3. Does the council's file show a code compliance certificate for the work that has been done here?

Say these as they are written. They are normal questions to ask.

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