|
We understand that some people need to know a lot more about a service before deciding to use it - especially one where another party is holding your hard earned money. So read on to find out even more detail about BUILDSAFE® and remember, we are happy to answer any questions either via the website, by phone or in person. BUILDSAFE® is an independent private Security of Payment Scheme. It has been developed specifically for the residential house building and construction market in New Zealand to improve the way people to construction contracts do business with each other and to help protect the financial interests of all parties to construction contracts.
Too often people commence building or renovation work with their hearts not their heads which means that sometimes decisions are made which are not ideal. For example, people will pay a builder that they have just met a significant sum of money (often $50,000+) as a deposit only to find the builder is not as honest as they assumed and they have lost all of their money. Likewise, builders often carry on working when they have payment concerns on the promise that payment is coming only to find that the home owners have spent all of their budget and the builder ends up not getting paid. BUILDSAFE® can help avoid these types of situations as it is an independent, fair and neutral third party which acts as an escrow agent. WHAT IS AN ESCROW AGENT?Basically, an escrow agent is a neutral third party which holds a sum of money in trust until such time as any contractual conditions are completed. When the conditions are complete (i.e. the work is properly completed) the money is handed over to the person(s) entitled to it under the contract. Under the BUILDSAFE® Security of Payment Scheme, the condition that must be satisfied before any money is released is the proper completion of the building works by the Contractor in accordance with the terms of the building contract. THE SECURITY AMOUNTBUILDSAFE® operates by holding an amount of money called the Security Amount which is paid by the Owner into the BUILDSAFE® trust account. The amount required to be paid as the Security Amount will depend on the value of the contract works and any agreement between the parties. For example, if the parties agree a 5 % deposit, BUILDSAFE® will hold that amount. Alternatively, there are Suggested Amounts provided by BUILDSAFE® which are calculated to be roughly the equivalent of the deposit required by most contractors under typical building contracts. That amount is also roughly the equivalent of the final payment to be paid to the contractor under the contract. The Security Amount is held in trust by BUILDSAFE® until the contractor has performed its obligations under the contract. This means that BUILDSAFE® will not release the money until the owner says that the work is properly complete (or if there is a dispute, an independent person confirms it is complete). Once the works are complete, BUILDSAFE® releases the Security Amount to the contractor (and the subcontractors, as the case may be), and the service is complete. Of course, if the contractor fails to perform its obligations such as by not completing the works or by doing defective works that require fixing) the money will be given back to the Owner.
To give you peace of mind, all money paid to BUILDSAFE® is held by the ASB in a trust account. Further, all payments into, or out of, the BUILDSAFE® Trust Account can only be made with the approval of Perpetual Trust as the Independent Custodian of the Scheme.
The Owner (sometimes called the Principal) notifies BUILDSAFE® when the work is Complete and the Security Amount is released. The Security Amount may be released earlier in the event of default by any party. Resolving Disputes If a dispute arises at any time during the course of the construction contract or on completion regarding the nature, quality, or value of any building work required to be undertaken under that contract, that dispute is dealt with immediately by a statutory process called Adjudication and the outcome, or determination as it is called, is binding on the parties.
For more on Adjudication or Dispute Resolution for the Building and Construction industry please visit the Building Disputes Tribunal website for further information.
|
