How to recover your deposit from a builder
You paid a deposit to a builder. The work hasn't started, isn't progressing, or has stopped entirely. You've asked for your money back and either been refused, ignored, or told to wait. This guide walks through the practical NZ recovery process: what to do in what order, with realistic chances of success at each stage. It's not the cheerful version. Most homeowners don't recover everything. But there is a path, and it works far better when followed carefully than when done in panic.
When are you entitled to a deposit back?
Whether you can demand a refund depends on what your contract says, what work has been done, and what consumer-law protections apply.
Under the Consumer Guarantees Act 1993 and the Fair Trading Act 1986, you're entitled to a refund of any portion of a deposit not yet earned through actual delivered work or unrecoverable costs (e.g. materials specifically ordered for your job that can't be returned). If a builder took $20,000 and has not yet started any work, all $20,000 should be refundable. If they've done $3,000 worth of work and ordered $5,000 of bespoke materials, you'd be entitled to refund of $12,000.
Many contracts attempt to define deposits as "non-refundable". This language is not always enforceable in NZ, because consumer law overrides contract terms that try to remove statutory guarantees. But it does add friction.
Step 1: Send a formal demand letter
Your first formal step is a written demand. This isn't a casual email. It should be a structured letter (email or printed) that lays out the legal basis for the refund, the amount demanded, and a deadline for response.
Include: the contract date, the amount paid, the work performed to date, the amount you're requesting back, the legal basis (Consumer Guarantees Act, Fair Trading Act, contract clause if relevant), a clear deadline (10 working days is reasonable), and a statement of next steps if no response (Disputes Tribunal application).
Send it via a method that proves delivery: email read receipts, registered mail, or both. Keep copies of everything.
Step 2: Disputes Tribunal (claims up to $30,000)
The Disputes Tribunal is your most powerful low-cost recovery tool. It hears civil disputes up to $30,000, costs $59 to file (one-off), runs without lawyers, and most cases are heard within 6-12 weeks.
Apply online at disputestribunal.govt.nz. You'll need: the builder's legal entity name (from NZBN), the amount you're claiming, evidence of payment, evidence of the contract, and a brief statement of why you're owed.
The hearing is informal. You sit at a table with a Disputes Referee, the builder gets to respond, and the referee makes a decision usually within days of the hearing. Decisions are legally binding. If the builder doesn't pay, you can enforce via the District Court using the Enforce a Judgment process, typically resulting in wage garnishment or asset seizure, though if the company has no assets you may still recover nothing.
- Cost: $59 application fee (one-off, regardless of claim size)
- Maximum claim: $30,000 (or $20,000 if it's a body-corporate dispute)
- Timeline: typically 6-12 weeks from filing to decision
- Lawyers: not permitted to represent you at the hearing (keeps cost low)
- Enforcement: District Court process if the builder doesn't pay voluntarily
Step 3: Lawyer + District Court (claims over $30,000)
If your claim is over $30,000, or your case involves complex contract issues, you'll need a lawyer and the District Court (claims up to $350,000) or the High Court (above that).
Lawyer costs for a building-deposit recovery typically run $5,000-$15,000 to get to a judgment. Whether to proceed depends on the realistic chance of recovery: if the builder's company has assets, it's worth it. If the company is on the brink of liquidation, you may spend $10k chasing $30k that doesn't exist anymore.
A good consumer-law lawyer will give you a realistic assessment in a 30-minute paid consultation ($200-$400). Use that consultation to decide whether to file or to write off the loss.
Step 4: Other avenues
If the builder is a Master Builders or NZ Certified Builders member, you may be able to lodge a complaint with their association. Most have a dispute-resolution process for members.
If the builder did restricted building work, the Licensed Building Practitioners Board has a complaints process at lbp.govt.nz. Outcomes range from formal reprimand to licence cancellation. This doesn't directly recover your money but creates a public-record disciplinary matter that adds pressure.
If you paid by credit card, contact your card provider about a chargeback. Many cards offer purchase protection that can recover funds in cases of non-delivery. Time limits apply (typically 60-120 days from the transaction).
MBIE's Consumer Protection page (consumerprotection.govt.nz) has a dispute-resolution scheme search to find the right body for your specific situation.
Realistic outcomes: what to expect
If your builder is still solvent and trading: realistic chance of full or substantial recovery via demand letter + Tribunal. Most cases settle once the builder receives the Tribunal application notice.
If your builder is in financial trouble but not yet in liquidation: partial recovery possible if you move quickly. Get in line ahead of other creditors.
If your builder is already in liquidation: realistic recovery is 0-10% via creditor claim. File the claim anyway, but mentally write the rest off.
If your builder is a sole trader (no company): you can pursue them personally. Easier for collection if they have personal assets (house, car), harder if they're judgement-proof.
Skip the manual checks.
CheckMyBuilder pulls the checks covered in this guide into one plain report: NZBN, LBP, court records, director history and news mentions from the official NZ sources. No afternoon spent on government websites.
Frequently asked questions
- How long do I have to act?
- There's no fixed statute of limitations urgency for most consumer claims. You typically have 6 years under the Limitation Act 2010. But practically, the longer you wait, the more likely the builder's company has dissolved and your recovery becomes impossible. Act within weeks, not months.
- Can I name and shame the builder publicly while pursuing recovery?
- Be very careful. Defamation law in NZ is strict and you can be sued personally for accusations that aren't proven. Stick to verifiable facts ("I paid $X on date Y, no work was completed, the builder has not refunded") and avoid characterisations ("scammer", "fraud"). Once you have a Tribunal or Court ruling in your favour, you can quote that directly.
- What if the builder threatens me when I demand a refund?
- Document everything in writing. If there are physical threats, contact police immediately. For intimidation via email or phone, keep records. None of this changes your underlying legal entitlement to a refund. It just adds to your case.
- Should I dispute it on Facebook / review sites?
- Online reviews can be useful, but they often backfire legally. Many NZ builders have successfully had reviews removed via defamation claims, and some have counter-sued reviewers. If you're going to post a review, stick to provable facts and tone ("I had a contract dispute, here's the ruling number") rather than emotional accusations.
- Can I cancel the contract entirely?
- Usually yes, under the Consumer Guarantees Act, if the builder has failed to perform a substantial part of their obligations. Cancellation should be in writing, citing the breach and your election to cancel. Take legal advice before doing this, because improper cancellation can weaken your position.
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.