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NZ Consumer Watch: New home buyers hurt

Property Here - Sunday, March 10, 2013

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Master Builders' paperwork is bone of contention

People signing to build a house are being warned that hiring a Master Builder doesn't mean automatically getting a guarantee. One couple are speaking out after losing $37,000 and hope others learn from it.

The Certified Builders Association and Master Builders offer customers of registered builders a guarantee that covers the quality of the construction work plus things such as loss of deposit if a builder goes out of business.

But when Location Homes North went into liquidation recently, one couple found the guarantee they were relying on didn't exist.

Joel Macfarlane and his partner, Polly, signed a contract for Location Homes North, owned by Steve Hahn, to build their home in Albany.

They paid a $37,000 deposit to cover council fees and the cost of getting the project under way.

Hahn months later rang to say his company had gone into liquidation.

"The first thing we thought was: 'Thank God we've got the Master Builders' guarantee'," Macfarlane said.

But Master Builders told them there was no record of them.

Master Builders' chief executive Warwick Quinn said buyers must sign a separate form to receive the guarantee, usually provided and completed with the help of the builder.

The fee for the guarantee, usually about $1,200, was often paid out of the initial deposit paid to the builders. But Macfarlane said Hahn never informed them of the need for extra paperwork.

Quinn would not specify how often Master Builders encountered guarantee complaints.

"It's not uncommon but it's not frequent."

Sue Chetwin, of Consumer, said her organisation had concerns about the Master Builders' guarantee and had received complaints.

"It's better than nothing but it's not perfect ... it doesn't seem that hard to become a Master Builder."

Campbell Matson, from Location Homes' head office, said several clients had been affected by Hahn's receivership.

He said if the guarantee form had not been submitted, the clients could put their case to the receivers.

"Some clients aren't informed well enough by the person they are building with that they should expect to see confirmation [of the guarantee] in the mail."

Herald on Sunday columnist Damien Grant last week said he had been told $100,000 had been paid out by Master Builders to Location Homes North's customers in the latest collapse.

But Macfarlane said he had been told that there were a pile of unsigned Master Builder guarantee forms on a desk in the Kumeu office. He said he and Polly had no way of knowing that there should have been another form to sign.

However, Quinn said Master Builders had been regularly receiving guarantee forms from Location Homes North and had processed claims from affected owners.

Now Macfarlane is $37,000 out of pocket and no closer to his new house. "What I want to understand is how I prevent this happening again."

A woman at Hahn's address said he did not want to comment.

Other Location Homes franchises are continuing to operate unaffected.