Geoff Hardy: Think twice before patching up a leaky home

The problem with leaky home repairs is the risk. Photo / Alan Gibson

When the Government announced its financial assistance package for leaky-home owners recently, it quoted some sobering figures from the July 2009 PricewaterhouseCoopers report.

They think the number of leaky homes in New Zealand that need fixing ranges from 22,000 to 89,000, but 42,000 is the most likely figure. Of those, only a mere 3500 or so have been repaired to date.

The others will have to be repaired, sooner or later, and the Government's package will encourage more homeowners to do that. What might upset their plans, however, is the shortage of builders who are prepared to take on the work.

Why should that be? After two years of recession, with residential building consents at less than half their normal volume, surely the demand for leaky-home repairs would be a godsend for out-of-work builders? Well yes, they will be tempted.

But it is a bit like the temptation to put your hand on the electric fence to see if it is switched on. The problem with leaky home repairs is the risk.

It is notoriously hard to fix up a leaky building that has been poorly designed or built to start with, especially when the owners are on a tight budget and you have been asked to do the bare minimum.

If the building continues to leak afterwards, the owners are going to be understandably annoyed and they are going to want to hold someone responsible. If the home was originally constructed more than 10 years ago, they can't hold the original builder responsible. So the builder who did the repairs becomes the primary focus.

That builder is at risk because, despite media reports to the contrary, it is now relatively easy for leaky home owners to sue.

The reason for that is the Weathertight Homes Resolution Service (WHRS) that was set up by government in response to the leaky home crisis. We hear a lot of complaints about the service but in reality it is a lot more user-friendly than the courts, arbitration or any other system of dispute resolution.

And now that the Government and the local councils are going to pay half of the repair bill no questions asked, the owners only have to pursue the others involved in the building project for the remaining 50 per cent.

Under the resolution service, the owners get a free investigation and comprehensive report done by a qualified building consultant. They then get a free case manager employed by government who co-ordinates the whole process for them from beginning to end.

They also get an adjudicator (like a judge) assigned to the case who they don't have to pay for, and who is actively involved from the initial stages right through to the end when he/she delivers a judgment.

And they also get the services of a free construction expert who presides over an all-day mediation, which in almost all cases results in a settlement of the dispute.

So if a builder has repaired a leaky home, and there is a chance that further leaks will develop in the future, it is more likely that he will be dragged into the argument and will have to spend a lot of money defending himself or proving his innocence.

In the Weathertight Homes service, the losing parties don't generally have to reimburse the successful parties' costs, so a builder may end up paying more in legal fees than he actually made on the project, simply to prove his innocence.

Therefore, prudent builders will think twice before taking on this work, and if they do take it on they will be very choosy. Some leaky-home projects are riskier than others. The most risky are those where the owner wants a cheap patch-up job done so he can quickly sell the house to an unsuspecting purchaser.

No builder should touch those jobs. In quick-fix cases, the owner invariably doesn't want a building consent because he argues this is merely a repair of an existing building and he wants the house restored to exactly the same state it was in before the leaks occurred.

The builder may be able to protect himself against liability to the current owner, by inserting appropriate provisions in his building contract, but it is very difficult to protect himself against subsequent owners.

Much less risky are the projects that have come to the local councils' attention, either because the council has been held accountable by the owners or because the owners have applied for a building consent.

It will be rare now for a council to consent to building work that merely restores a leaky home to its former state.

Councils take the view that that style of house no longer complies with the building code, so this time around they will insist on such things as battened cavity systems, treated framing timber, flashings and eaves.

Therefore, the builder who is asked to do the repair job will be much less at risk, simply because the house is much less likely to leak again in the future.

There are other ways to minimise the risk. Builders should not agree to do leaky building repair or remediation work unless an experienced and reputable building surveyor has done a thorough investigation of the causes of the leaks (including invasive testing), and has recommended a comprehensive repair programme.

That recommendation must then have been incorporated into a set of plans and specifications prepared by a qualified professional, such as an architect.

Builders can also protect themselves by negotiating the terms on which they are prepared to do the work. These terms would be recorded in the building contract and would be effective against the current owners, but not subsequent owners.

The contract could provide, for example, that the builder is only hired to do the work shown in the plans and specifications, not to comment on them, nor to point out any potential defects either in the repair work or in the rest of the house that is not affected by the repairs.

Not every leaky-home owner will have the financial resources to approach the repair job thoroughly. For those who do not, we may find that our stock of leaky homes takes a lot longer to fix than anyone anticipated.

* Geoff Hardy is the principal of Auckland-based law firm Madison Hardy.