Message to vendors: Be honest about condition

Anyone trying to sell their leaky home has been warned to front up and be honest after a court victory which saw a buyer awarded $407,000.

Susan Pezaro, a Weathertight Homes Tribunal adjudicator, has just made the large order against the vendors of the Auckland house.

Now, Arran and Michelle Slater have to pay Richard and Hayley Tabram $407,343.14 after selling them 89 Pacific Parade, Army Bay, Whangaparaoa. The house had been fixed at huge expense to the Tabrams.

Tim Rainey, the Tabrams' lawyer, said the case sent a message to all owners of leaky homes who thought they could keep quiet about the issues.

"This is a warning to all those people just how wrong selling can be. The thousands of people with leaky homes might think it's better to just sell and not find out how bad things are.

"This case highlights how that can be the very worst thing you can do because you end up exposing yourself to significant liability."

The case was heard in February and March, and the decision is one of the largest from the tribunal.

The Tabrams claimed the Slaters breached their vendor warranties under the sale and purchase agreement and that the couple were head contractors/builders of the house.

Arran Slater "exercised control over the construction of the house in such a manner as to attract a non-delegable duty of care", Mr Rainey argued for the Tabrams.

In 2005, the Tabrams bought the place for $755,000 but had to spend thousands fixing it, engaging Jennian Homes in a rebuild and recladding.

Their case is just one of many where buyers have found themselves with leaky homes needing thousands of dollars to fix. The buyers often unwittingly step into the rot crisis.

An estimated 80,000 New Zealand homes leak and could cost a total of $500 million to $5 billion to fix.

Mr Slater told the tribunal how he had built parts of the house, including putting up parapets and designing and installing aluminium hand rails. He substituted building materials.

Mr Slater's lawyer, Eddie Taia, told the tribunal his client held an honest and reasonable belief that there were no major defects and only three sides of the house needed to be reclad.

The tribunal cited Mr Slater's "fraudulent misrepresentation" on a workmanship guarantee for the plaster cladding system on the house and said it did not agree with Mr Taia's submissions.

Limited or targeted repairs would not have won council consent, "and it was reasonable from the Tabrams to repair on the basis of a full reclad", the tribunal decided.

In February, Mr Slater said he was angry that the case was going before the tribunal because he felt it could have been settled by mediation.

"Whatever way it goes it is expensive and exhausting for both sides."

He had offered the Tabrams $80,000 as settlement, a sum that was rejected.

The Tabrams had known the house had major weathertight defects, but decided to go ahead and buy anyway, he said.

A pre-purchase building inspection was done, as was a land-information memorandum.

"The report they had on the house was very clear of its condition, so much so that it shocked me," Mr Slater said.

The tribunal found the Tabrams "set aside good judgment in favour of securing this property and meeting the needs of their family due to arrive from the United Kingdom".

Mr Rainey estimated the Tabrams had spent $60,000 on legal fees and he planned to apply for costs.

TABRAMS WON

Contract damages - $368,716
Interest on loans - $13,262
General damages - $25,000