How can I tell if a builder is dodgy?
Short answer
There's no perfect test, but several patterns recur in problem-builder cases: no written contract, deposit asked in cash, no LBP licence visible on the job, recent company with no track record, multiple liquidations on the director's history, dropping out of contact for days at a time, vague answers about insurance and warranty, pressure to start work before paperwork is signed. One signal alone isn't proof. Two or more should pause you.
Source: Building Act 2004 section 362K. Updated May 2026.
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Check a builderKey facts
- Written contract is a legal requirement over $60,000 — refusing one is a clear red flag
- Cash deposit requests are illegal under AML rules over certain amounts and unwise at any amount
- LBP details should be visible — name and number — on every job
- Multiple director liquidations is a pattern worth pausing on
- Pressure to start before paperwork is the classic warning sign
The eight signals
1. Won't give you a written contract, or one that meets section 362K of the Building Act.
2. Asks for a large deposit (over 10%) or cash.
3. Won't show the LBP licence — won't name the LBP signing the work.
4. Company is very new (under 12 months) and asking for a high-value contract.
5. Director has multiple recently-liquidated companies on Companies Office.
6. Pressure to start before contract or consent is sorted.
7. Vague on insurance — won't produce a certificate of currency for public liability.
8. Vague on warranty — claims a warranty but isn't a member of RMB / NZCB and won't name the underwriter.
What to do if you spot signals
Don't accuse. Ask. 'I noticed your previous company went into liquidation in 2022 — what happened, and what's different now?' A reasonable builder will explain. An evasive answer is itself data.
If you've already signed and paid, slow down. Don't pay further claims until you've talked to a construction lawyer. Most metro areas have $50-150 30-minute consultations or free Community Law sessions.
What's NOT a red flag
Working from a residential address (most NZ builders do). Being a small operator (most NZ builders are). Charging less than a group builder for the same scope (that's the point of a small builder).
Focus on the signals above, not surface-level optics.
Knowing the rules is half the job. The other half is knowing who you're hiring. Check any NZ builder against the public record: company status, licensing and insolvency notices, from the official NZ sources.
Planning the project? See the costs
Related questions
Sources: Building Act 2004 section 362K; Consumer Protection NZ; MBIE Building. General information for NZ homeowners, not legal advice. Building rules change and vary by council, so confirm critical details on the official source before acting. Last updated 2026-05.