12 builder red flags to spot before you sign anything
If you've spent any time on NZ homeowner forums or read Stuff's consumer columns, you've seen the stories. Six-figure renovations abandoned half-finished. Deposits taken and never refunded. Companies that liquidate two months after taking on three new projects. Almost every one of these stories has the same pattern — the warning signs were there, but the homeowner didn't recognise them. Here are the twelve to watch for.
Red flags about the company itself
These are the structural ones — they're about who you're dealing with, not how they communicate. Most are visible in public records before you ever meet the builder.
- A brand-new legal entity. The current company was incorporated in the last 12 months, even though the builder claims years of experience. Often means a previous company was wound up to escape obligations.
- The director has a string of previous companies. Especially if those companies are in liquidation, struck off, or were involved in disputes. The pattern repeats — that's the most reliable predictor in the entire industry.
- No verifiable industry membership. No current Master Builders or Certified Builders membership, despite claims on the website. Verify on the association's site, not the builder's.
- Wrong or missing LBP licence for the work. If they're doing restricted building work without the right LBP class, the work is illegal and your council won't sign it off.
Red flags about how they communicate
These show up early in the relationship. Trust your instincts here — these patterns rarely improve once the contract is signed.
- Pressure to decide quickly. "This price is only good until Friday" or "I have another job lined up so we need to confirm" is almost always a tactic. Real builders are happy to give you time.
- Refuses to give a written quote. A verbal quote with no breakdown is a major flag. Every legitimate builder provides a written quote with line items, exclusions, and timeframes.
- No physical address or office. Just a mobile number and a Gmail address. If you can't visit them and there's no registered office on the NZBN record, that's a problem.
Red flags about pricing and payment
Money is where most disasters either start or end. Watch for these specifically.
- A quote significantly cheaper than every other quote. Twenty percent below the average can mean efficiency. Forty percent below the average usually means corners cut, materials skipped, or a quote designed to win the job and re-priced through variations.
- Large upfront deposit demand. The Master Build 10-Year Guarantee specifically caps protected deposits at 10% of the build cost — that's the industry benchmark. Anything materially above 10% upfront, before any work has started, should make you uncomfortable. Reputable builders bill in stages tied to milestones.
- Cash-only or off-the-books payment requests. Sometimes framed as "saving you GST" or "keeping it simple". You lose all consumer protections if anything goes wrong.
Red flags about the contract
If the contract is bad, everything that comes after is harder. Take this seriously — get a lawyer to look at any contract over $30,000.
- No written contract, or a one-page contract. Residential building work valued at $30,000 or more (including GST) must have a written contract — this has been mandatory since 1 January 2015 under the Building Act 2004. A one-page contract for a major job leaves you almost no protection if things go wrong.
- No defects period or maintenance period. Standard NZ contracts include a defects liability period (usually 12 months) where the builder fixes issues at their cost. If the contract excludes this, you're carrying all the risk.
Skip the manual checks.
CheckMyBuilder runs every check covered in this guide automatically — NZBN, LBP, court records, director history, news mentions and an AI risk score. One report, one fee, no afternoon spent on government websites.
Frequently asked questions
- What's the single biggest red flag?
- Pattern of failed previous companies behind the same director. It's the most reliable predictor of how the current job will end. Every other flag can have an innocent explanation; this one almost never does.
- Should I always avoid the cheapest quote?
- Not always. A 10-20% discount can reflect efficiency, lower overhead, or wanting to win a portfolio piece. But a 40-50% discount almost always means something will go wrong — either through cut corners or aggressive variation pricing once you're locked in.
- How big a deposit is normal in NZ?
- 10% of the build cost is the industry benchmark — the Master Build 10-Year Guarantee caps protected deposits at exactly that figure. Anything materially above 10% upfront should be challenged. Anything cash-only should be refused.
- What if I've already paid a deposit and now I'm worried?
- Don't pay the next milestone. Get the company name and run a check on it (NZBN status, director history, court records). If the flags are real, contact a building lawyer immediately — Citizens Advice Bureau has a free initial referral.
Related guides
This guide is general information for NZ homeowners and is not legal or financial advice. Names of registers, associations and dispute bodies are accurate at time of publication. Always confirm critical details on the official source before acting.