Homeowners treading legal minefield

By CHRISTINE MEECHAN*

The report by the Building Industry Authority on how weathertight houses are raised as many questions as it answered.

The thousands of homeowners grappling with this problem will find little comfort from recommendations to review and improve industry training and building consent procedures.

While these recommendations are laudable, it would take some years before they bit in terms of insuring that the buyer of a new home could be confident the house he or she was buying would be sound and watertight.

The report criticised the building sector's lack of responsiveness to this multimillion-dollar problem and noted that, until now, the reaction had been largely one of angry owners, faced with large and unexpected repair bills, seeking redress through the legal system.

None of these cases have so far got to court. But a day in court may not necessarily bring satisfaction to homeowners as they struggle, first, to find someone who is worth suing and, secondly, to establish either breach of contract or negligence by those involved in the design, building and approval for construction of the home.

If you have bought your home from a previous owner, rather than from the builder or developer directly, there will be no contractual relationship between you and the builder and developer, which means you cannot bring a claim for breach of contract against them.

You may be able to bring a claim of negligence, but proving that the builder owed a duty of care to subsequent buyers, that he has breached his duty and that he ought to have foreseen the loss or damage which has occurred are by no means straightforward tasks.

Often others involved in the building process, such as subcontractors who fixed the cladding or installed the windows, will also be sued. But, again, the subsequent buyer will face difficulties in proving those subcontractors owed him or her any kind of duty of care.

The legal minefield created by these situations no doubt add to the frustration and disappointment of these homeowners.

It would be naive to say there is an easy solution or even a fair solution where the problem has been caused by several contributing factors and no one party can be fairly singled out as being completely responsible.

If you own a leaky home:

* Go back to your sale and purchase agreement and check the seller's warranties and undertakings. The standard form of sale and purchase agreement will usually contain a warranty for compliance with permits and consents, and also confirm that a code of compliance certificate has been obtained for work done on the building.

* If your property was part of a subdivision or larger development, check any promotional material given to you for assurances on the quality and standards of finishing, and whether misleading or deceptive representations of the building were made.

* Find out what materials or building systems were used in construction and what, if any, warranties they came with.

* Search the property file at the council office to find out what consents were granted, what, if any, inspections were carried out by the local council and who signed off the building by giving it a code of compliance certificate.

* Check your insurance policy. If your house has just been completed, there may be a contractors' all-risks policy taken out by the builder. It can be relied on to cover some of the loss or damage, although this will depend on the nature of the damage and when it occurred.

A standard home and contents policy will usually include an exclusion for gradual deterioration, wear and tear and damage caused by water, mildew or mould. There may be arguments about what lawyers call the proximate cause of the damage.

If you are considering buying a home:

* Spend money on a comprehensive pre-purchase check. This needs to be more than just a visual inspection of the outside of the house. You will need to get the seller's agreement to the test. If you want to put in an offer before completion of the test, make sure you include an appropriate condition in the sale and purchase agreement enabling you to cancel if the test is not satisfactory.

* Find out from the original builder as much as you can about the products or systems used in construction.

* Ask the seller and the real estate agent if there have been problems with water entering any part of the structure.

* Ask if any internal walls have been painted or papered and if any carpets have been replaced in the past two years. If the answer is yes, find out why.

* Have a look at the house on a wet and windy day. Are the gutters coping with the flow of water off the roofs? Is rain being driven on to unflashed windows?

* Inspect the council's file and get a LIM report before you sign.

Make sure the territorial authority issued a code of compliance certificate. The authority report highlighted that many thousands of homes have not received this final sign-off.

* Christine Meechan is a litigation partner in legal firm Bell Gully, Auckland.

* If you have information about leaking buildings,
email the Herald or fax (09) 373-6421.

Further reading
Feature: Leaky buildings

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