Deposits, Contracts and Your CPA Rights

Never pay 100 percent upfront, never sign without a written contract, and know that the Consumer Protection Act (CPA) gives you real rights when a service is shoddy or goods are defective. A deposit of 10 to 33 percent on commencement is common for residential building work, but an NHBRC-registered home builder may not take a deposit before signing the contract and enrolling your home. This guide covers fair deposits, what a small-works contract must contain, and the warranties the law gives you.‍‌​​​‌​​​‌‌‌​​​​‌​​‌​​​‌​‌‌​​​‌‌​‍

Fair deposits

A deposit is normal, but it should be proportionate and tied to a signed contract:

• The industry norm is a 10 to 33 percent deposit on commencement for residential construction work.
• A builder registered with the NHBRC (National Home Builders Registration Council) may not demand a deposit before signing a building contract and enrolling your home with the NHBRC.
• For made-to-order goods, such as custom kitchens and cupboards, a 30 to 50 percent deposit is common, but it must be proportionate to the actual costs the supplier has incurred. This is the rule under CPA section 17.

Never pay the full amount upfront. Stage your payments against milestones written into the contract, and retain at least 10 percent until the snag list is signed off.

Your CPA rights

The Consumer Protection Act (CPA) gives you protections that apply to most building and trade services:

• CPA section 54 (service quality): services must be performed in a reasonable time, with reasonable care and skill, and without damage to your property. If they are not, you can require the supplier to remedy the defective service, or you can demand a price reduction.
• CPA sections 55 to 56 (six-month implied warranty on goods): any goods built into the works, such as tiles, flooring, fixtures or cupboard carcasses, carry a six-month implied warranty from delivery or installation. Within those six months you can demand repair, replacement or a full refund for defective goods.
• CPA section 57 (three-month parts warranty): parts used in a repair service carry a three-month warranty.

One important limit: the CPA does not apply to a private sale, meaning one individual selling to another outside a business context.

The NHBRC warranty (new homes only)

If you are having a new home built, the builder must enrol it with the NHBRC. Enrol the home at least 15 days before construction starts. The NHBRC warranty then covers:

• Three months for defects and snags.
• One year for roof leaks.
• Five years for major structural defects.

The maximum payout under the NHBRC warranty is R500,000. The NHBRC scheme applies to new homes, not to repairs or alterations, so it sits alongside, not instead of, your CPA rights on goods and services.

What a fair small-works contract contains

A written contract is essential for any job over roughly R5,000. The CPA section 22 requires contracts to be in plain and understandable language. At a minimum, yours should include:

• Parties: full names and contact details, plus the contractor's CIDB, NHBRC or PSIRA number.
• Scope of work: a detailed description of what is and is not included.
• Materials: the brand and grade of materials to be used, and who supplies them.
• Price: a fixed price or a schedule of rates, and how variations are agreed (in writing only).
• Payment milestones: the deposit, progress payments, and a final payment, retaining at least 10 percent until the snag list is signed off.
• Timeline: the start date, completion date, and what happens for delays beyond the contractor's control.
• Warranties: any express warranty over and above the CPA minimums.
• Dispute resolution: how disputes are handled, such as the NCC, the CGSO, the Small Claims Court or arbitration.
• CoCs: which certificates of compliance will be delivered on completion, and by when.
• Cancellation: the cancellation terms, including your CPA section 17 right to cancel.

Common mistakes

• Paying 100 percent upfront. Stage payments against milestones and keep a retention until snags are fixed.
• Letting an NHBRC builder take a deposit before the contract is signed and the home is enrolled. That is not allowed.
• Working on a handshake. Without a written contract you have far less to stand on if it goes wrong.
• Paying a deposit on custom goods that is bigger than the supplier's actual costs so far. CPA section 17 says it must be proportionate.

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