You hand a building company a large sum before much has happened on site. That is true of any new home or major renovation.
A master builder warranty serves the purpose of protecting you when things about your build turn out wrong. When, for some reason, a builder cannot finish the job, or if something fails inside your house even if just a few years after you move in, then the warranty is there to protect you.
Some refer to this as a new build house warranty, or a 10-year new home warranty, or, to further keep it simple, a builder's guarantee. All of these refer to the same thing. Here's what it is in easy-to-understand terms.
Quick Summary
A master builder warranty protects your precious investment even before a build or renovation begins. Known as a Master Build 10-Year Guarantee, only a Registered Master Builder can actually offer it. It's different from a building contract, since this is something that you must apply for and secure approval before building works start. The warranty covers five specific things: loss of deposit, non-completion, materials and workmanship, structural defects and temporary accommodation.
Cover caps total claims at $1,000,000, or the contract value, and a new build warranty usually costs under 1% of the build cost. The Building Act is clear on these warranties and covers you for 10 years, as long as your building company still trades.
What the 10 Year Master Builder Guarantee Covers
The 10-year master builder guarantee covers five situations. Each carries its own limit and time frame, and the Registered Master Builders Association sets them out in full. You will also see it written as the 10-year master build guarantee or the master builders 10 year guarantee.
| What is covered | Limit | How long it lasts |
|---|---|---|
| Loss of deposit | Up to $50,000 or 10% of contract value, whichever is less | Before permanent work starts on site |
| Non-completion | Up to $500,000 or 20% of contract value, whichever is less | Once permanent work has begun |
| Materials and workmanship | Cost of remedying work not built as specified | Two years from practical completion |
| Structural defects, the 10 year structural warranty | Load-bearing failure, or damage leaving a home unsafe or uninhabitable | 10 years from acceptance |
| Temporary accommodation | Up to $10,000 | While repairs happen |
Just to be clear: the 10-year structural warranty lasts the longest of the five. However, it is not correct to call it builder's insurance.
It is also not correct to call it builders warranty insurance. It is not homeowners warranty insurance either. Your builder must send the practical completion notice first, before warranty or cover for materials and workmanship starts.
How Long a Builder Is Liable for Their Work in NZ
Every residential home builder in New Zealand already carries liability for their work for up to 10 years. Implied warranty Building Act cover applies automatically, with or without a written contract. The Building Act 2004 also sets a 12-month defect repair period. The table shows where the guarantee adds what the law does not.
| If this happens | Implied warranty Building Act cover | Master Build 10-Year Guarantee |
|---|---|---|
| Builder fails before starting, deposit paid | No protection | Loss of deposit cover |
| Builder cannot finish the house | No protection | Non-completion cover |
| Work not built as specified | 12-month defect period, then 10 years with proof on you | Two years, claim through the association |
| Structural failure appears later | Up to 10 years for specific items | 10 years from acceptance |
So why buy a builders guarantee at all? Two reasons.
Enforcement falls on you. Activating implied warranties means going to court and proving loss. After 12 months, you carry the burden of proof.
The law needs a solvent builder. A building company can go into liquidation midway through your build. Legislation then offers nothing for a lost deposit or an unfinished house.
That is where a builder's warranty earns its keep.
How to Get a Master Builder Warranty on Your Build Getting a master builder warranty takes four steps, all before anyone picks up a hammer.
Raise it at the quoting stage. Only a Registered Master Builder can offer the guarantee, so ask early.
Complete the application together. Your builder fills it in with you and submits it on your behalf.
Chase it after 14 days. If written confirmation has not arrived by then, follow it up.
Confirm approval before work starts. You are not covered until that confirmation lands.
Pricing runs in tiers against the contract value, usually under 1% of the build cost. Decline it, and you sign a waiver confirming the offer. Most mortgage lenders now expect a 10-year building guarantee. A builder's warranty on new homes is close to standard.
Transferring Your Guarantee When Selling Your Home
A Master Build Guarantee transfers to the new owner. That makes it a selling point, not just a safety net. The transfer rules are worth knowing before you list.
| Requirement | Detail |
|---|---|
| Form | Request for Transfer, lodged by the new owner |
| Deadline | Within 90 days of settlement |
| Transfer fee | $400 including GST, paid by the new owner |
| First transfer | Free from a development company to the first homeowner, within 90 days |
| Repeat transfers | Any number inside the 10-year life, though cover never extends |
In practice, the new owner lodges the master builder guarantee transfer form. They accept the master builder's guarantee terms and conditions, then pay the master builder guarantee transfer fee. Miss the 90-day window and the cover is lost.
The Builder's Attitude Towards the Guarantee Speaks Volumes
How a building company talks about the guarantee tells a lot about how attuned they are to your concerns and worries as a customer. The following are red flags worth noticing:
Gives a vague answer when asked whether the guarantee is available.
Nudging you to sign the waiver without clearly explaining what you would be giving up.
No mention of it at all until you proactively raise it.
An honest builder will offer this whenever it's available. Our guide to choosing the right builder in Dunedin covers these and much more. It also explains why the cheapest quote rarely works out cheapest.
Our team is composed of Registered Master Builders, and we would rather explain the gaps than have you regretfully find them later. Your peace of mind is as valuable as ours.
Talk to Us About Your Plans
Planning a new build or renovation in Dunedin, Mosgiel or across Otago? We can talk through how the guarantee would apply and what it would cost at your contract value.
No pressure, no obligation. Get in touch, or read more about our new home builds and what hiring a Registered Master Builder in Otago involves.
References
Ministry of Business, Innovation and Employment. (n.d.). Implied warranties and defects. Building Performance. https://www.building.govt.nz/projects-and-consents/why-contracts-are-valuable/implied-warranties-and-defects
Registered Master Builders Association of New Zealand. (n.d.). Master Build 10-Year Guarantee. https://www.masterbuilder.org.nz/RMBA/Guarantees/10-Year_Guarantee.aspx
Registered Master Builders Association of New Zealand. (n.d.). Transfer a Master Build Guarantee. https://www.masterbuilder.org.nz/RMBA/Guarantees/transfer_a_Guarantee.aspx