When does NZ law require a written residential building contract?
Section 362A of the Building Act 2004 requires a written building contract for all residential construction work where the price is $30,000 or more including GST. Below that threshold, a written contract is not legally required, though it is still strongly recommended for any job of substance.
The contract must meet the minimum requirements prescribed in Part 4A of the Building Act and the Building (Residential Consumer Rights and Remedies) Regulations 2014. Those requirements cover things like what the contract must contain, what information must be given to the client before signing, and what remedies apply when a builder fails to comply.
The practical takeaway: if you are running a residential building business, the large majority of your jobs will hit the $30,000 threshold. You need a compliant written contract for every one of them. The three options most commonly used by residential builders in New Zealand are NZS 3902:2004, the RMBA RBC1 New Build contract, and the RMBA RBC1 Alterations and Additions contract.
Any written building contract you use for residential work over $30,000 must comply with Part 4A of the Building Act 2004. The contract forms described here are designed to meet those requirements, but it is your responsibility to ensure the version you are using is current and compliant.
What is RBC1 (New Build), and when is it the right contract for your build?
The Registered Master Builders Association Residential Building Contract: New Build (RBC1) is the RMBA's standard form for new residential construction. It is a member-only document, available to Registered Master Builders through the RMBA's member portal. It cannot be purchased or downloaded by non-members.
Based on publicly available information and published legal commentary, RBC1 New Build allows for either a lump-sum (fixed price) or a charge-up (cost-plus) arrangement. The lump-sum option includes provisions for price adjustments through variations, provisional sums, prime cost sums, and extension of time costs. The contract defines the "Contract Price" to include these adjustments. The price you quote and the price the client ends up paying can differ.
RBC1 New Build suits builders who: are Registered Master Builders; are building a complete new residential dwelling; want a contract form that is specifically tailored to residential new builds; and intend to offer the Master Build 10-Year Guarantee as part of their value proposition.
The contract is regularly updated by the RMBA. Always use the current version. At the time of writing, the current version is RBC1 (2018).
What is RBC1 (Alterations and Additions), and when does it suit better?
The RMBA also produces a separate residential contract for alterations and additions work. Like the New Build version, it is a member-only document. It covers renovation, extension, and alteration work on existing residential buildings rather than ground-up new builds.
The distinction matters practically. Alterations and additions work involves more variables than a new build. Existing structure, unknown conditions behind walls, council requirements that emerge during the work, and scope that can shift as the job progresses. A contract designed for this environment handles variations and unknowns differently from one designed for a project starting from a clean slab.
Use the Alterations and Additions version for: any job where you are working on an existing residential building; extensions, renovations, or fit-out work; and projects where the scope is likely to change as work proceeds and conditions become visible. Do not use the New Build contract for alterations work. The risk allocation and variation provisions are calibrated differently.
What is NZS 3902:2004, the free Standards NZ alternative?
NZS 3902:2004, titled "Housing, alterations and small buildings contract," is a standard contract form published by Standards New Zealand. The Ministry of Business, Innovation and Employment (MBIE) has sponsored free access to it, meaning any builder can download it at no cost from the Standards New Zealand website.
Unlike the RMBA contracts, NZS 3902 is not restricted to members of any industry body. Any Registered Master Builder, New Zealand Certified Builder, Licensed Building Practitioner, or other contractor can use it.
NZS 3902 is written in plain English. It covers house construction, alterations, and simple building work. According to the LBP programme guidance, it meets the minimum requirements set out in Part 4A of the Building Act 2004 and includes a disputes resolution process.
It is described by Standards New Zealand as suited to situations where "the owner is making their own building arrangements". This means the owner is engaging the contractor directly, without a separate professional design-and-administer role. It should not be used as a labour-only contract or where the owner has engaged a professional to design and administer the work.
Download NZS 3902:2004 for free from the Standards New Zealand sponsored standards page.
RBC1 vs NZS 3902: side-by-side comparison
The comparison below is based on publicly available information. RMBA contract provisions are described from published legal commentary and publicly available RMBA guidance, not from the member-only documents themselves.
| Dimension | RBC1 New Build | RBC1 Alterations & Additions | NZS 3902:2004 |
|---|---|---|---|
| Cost to access | Member-only (RMBA membership required) | Member-only (RMBA membership required) | Free download (MBIE-sponsored) |
| Project type | New residential builds | Alterations, additions, renovations | New builds, alterations, simple building work |
| Pricing options | Lump sum or charge-up (cost-plus) | Lump sum or charge-up (cost-plus) | Lump sum or cost-plus |
| Variation regime | Variations and price adjustments defined; multiple cost-increase mechanisms including provisional sums and EOT costs (per published legal commentary) | Similar to New Build, calibrated for alteration scope changes | Variations must be agreed in writing; disputes resolution process included |
| Payment terms | Progress payments; specific terms in contract details | Progress payments; specific terms in contract details | Progress payments; plain English payment provisions |
| Retention | Retention provisions available (check current version) | Retention provisions available (check current version) | Retention provisions included |
| Defects liability | Defects period provisions included | Defects period provisions included | Defects period provisions included |
| Dispute resolution | Disputes process included; CCA adjudication available | Disputes process included; CCA adjudication available | Disputes resolution process included; CCA adjudication available |
| Links to 10-Year Guarantee | RMBA members can apply for Master Build 10-Year Guarantee | RMBA members can apply for Master Build 10-Year Guarantee | Not linked. RMBA membership (not contract form) is the requirement |
| Who can use it | RMBA members only | RMBA members only | Any builder or contractor |
| Suitable project size | Any residential new build over $30K | Any alterations/additions over $30K | Residential builds and simple building work; not for large complex projects |
The Master Build 10-Year Guarantee: what it actually covers
The Master Build 10-Year Guarantee is a product underwritten by the Registered Master Builders Association. Based on RMBA's publicly available information, only RMBA members can offer it. The contract form you use does not determine eligibility. Your RMBA membership does.
The guarantee provides the following coverage, based on information published on the RMBA website:
- Loss of deposit: Up to $50,000 or 10% of contract value (whichever is less) if the builder cannot start the project.
- Non-completion: Up to $500,000 or 20% of contract value if the builder cannot finish the build.
- Materials and workmanship: Defects in building work for the first 2 years after practical completion.
- Structural defects: 10-year cover for structural failures that make the building unsafe, unsanitary, or uninhabitable.
- Temporary accommodation: Up to $10,000 if the homeowner must vacate during remediation work.
The total claims limit under a Master Build 10-Year Guarantee is up to $1,000,000 or the value of the building contract, whichever is less.
The guarantee is a genuine competitive advantage for Registered Master Builders. It addresses one of the biggest concerns homeowners have: what happens if the builder fails to complete, or if defects appear years later. Understanding what it covers (and what it does not) is worth your time, so you can explain it accurately to clients without overselling it.
The Master Build 10-Year Guarantee is available only through RMBA members. It is not available to builders using NZS 3902 alone unless they are also RMBA members.
What the critics say: public concerns about the RMBA contracts
The RMBA contracts have attracted public criticism from construction lawyers. This criticism is based on how the contracts handle risk allocation, and builders using them should understand it, because their clients may have read it.
In April 2023, construction litigator John Walton wrote in Newsroom that the risk allocation in the Master Builders residential contract was "almost comical," arguing that the contract strongly favoured the builder over the homeowner. The article was widely read and shared. Provan is not the source of this criticism. It is attributed to Walton's published commentary.
Separately, legal commentary published by Tom Evatt and Co identified that while RBC1 markets itself as a "fixed price" contract, the definition of "Contract Price" includes adjustments for variations, provisional sums, prime cost sums, extension of time costs, and other mechanisms. The commentary concluded that "the price specified in the contract details of an RBC1 contract is not a fixed price and is subject to change."
The RMBA states publicly that the contract is regularly reviewed to remain relevant and fair. That review process is internal to RMBA.
What this means for your business: if you are using RBC1, know how the adjustment provisions work before you explain the contract to a client. A client who later reads the Walton Newsroom article and feels the contract was not fairly explained to them is a dispute risk. The adjustment provisions are not inherently wrong. Building work involves genuine uncertainty, and builders need protection against costs outside their control. But those provisions need to be understood and disclosed.
Which contract should your business use? A practical builder's decision
There is no single right answer. It depends on your membership, your project type, and your administration approach. Here is a decision guide.
Use NZS 3902:2004 if:
- You are not an RMBA member and need a compliant, free contract form for residential work.
- You want a plain-English contract that is easy to explain to homeowner clients.
- You are doing a mix of new builds and alterations and want a single contract form that covers both.
- Your client is cost-sensitive and you want to demonstrate straightforward, transparent contracting.
- You are comfortable administering your own contract without RMBA support materials.
Use RBC1 (New Build) if:
- You are a Registered Master Builder with RMBA membership.
- You are building a complete new residential dwelling.
- You want to pair the contract with the Master Build 10-Year Guarantee as a client offering.
- You are familiar with the adjustment and provisional sum provisions and can explain them clearly to clients.
- You value RMBA's member support and contract guidance resources.
Use RBC1 (Alterations and Additions) if:
- You are a Registered Master Builder and your work is renovations, extensions, or alterations rather than new builds.
- You want a contract form calibrated for scope uncertainty and changes that emerge during alteration work.
- You intend to offer the Master Build 10-Year Guarantee on renovation work.
Get legal advice before signing any non-standard contract presented by a client or their lawyer. A contract drafted on the client's behalf will not be written with your interests in mind.
Choosing the right contract is step one. Administering it correctly is where most residential builders run into trouble. Payment claims, variation instructions, defects notices, and extensions of time all need to be managed in writing, on time, and in the format the contract requires. The Construction Contracts Act 2002 applies to all three contract forms, including the payment schedule obligations. If you want to understand how payment deadlines work under the CCA, read CCA Payment Deadlines — What Happens When You Miss Them.