We have developed a committed and experienced team of lawyers to handle leaky building claims, with expertise in property law, construction disputes and insurance law. We act for all parties involved in leaky building disputes – leaky home owners, developers, design professionals, and contractors alike. As recognised leaders in this field we are well qualified to assist you in any dispute arising from the leaky building crisis.
Our experience allows us to provide a candid assessment as to whether you have a claim arising from leaky building defects, advise you who may be liable and whether there is any limitation or any other legal difficulties with your claim. We can then advise on the options open to you, including:
What is a “leaky building”?
A “leaky building” is one that – as a result of defective design, materials, or construction (or more likely a combination of all three) – allows water to enter through the external building envelope, and fails to deal with that moisture when it gets in. This causes decay and damage to the internal structure of the building.
How did the leaky building crisis occur?
The leaky building crisis arose from of a combination of factors in the late 1990’s and early 2000’s that saw the construction of a large number of buildings that were vulnerable to moisture ingress.Leaky buildings were typically:
- Built with face fixed monolithic cladding systems which relied to a large extent on the total exclusion of external moisture to meet the external moisture and durability requirements of the Building Code and provided little or no margin for error if moisture ever did penetrate behind the cladding and into the building cavity.
- Built using untreated kiln dried framing timber which had recently been approved by the Building Industry Authority as a material that met the durability requirements of the Building Code but which was particularly susceptible to any moisture ingress. This meant that by the time the homeowner realised that there was a problem it was already too late to fix it without rebuilding significant parts of the structure of the building.
- Built by developers who had no incentive to pay for the proper design of the buildings, let alone the appropriate level of supervision of construction to ensure they were completed properly. Mostly these developers used a company to carry out the development which was then wound up after all of the units were sold. This let the developer take the profits but avoid any liability if anything went wrong.
- Built at a time when there was a boom in the housing market in New Zealand and a large number of builders with little or no industry related qualifications, experience, or supervision were carrying out construction work using new monolithic exterior cladding systems.
- Built at a time when the last line of defence for the homeowner (the territorial authorities and building certifiers responsible for ensuring buildings met the minimum standards for construction in the Building Code) were not meeting their obligations under the Building Act 1991 to take all reasonable steps to ensure that buildings were built in accordance with the Building Code.
When did the leaky building crisis begin?
The epidemic of leaky buildings coincided with the introduction of a new performance-based building code in 1992 which encouraged the use of new building materials and methods, and led to the widespread use of monolithic exterior cladding systems.
How do I know if I’ve got a leaky building?
Many monolithic clad homes leak, but it’s difficult to confirm whether a monolithic clad house has systemic leaky building problems by way of a visual inspection alone. The only way to be sure is to have a properly qualified building consultant carry out invasive or destructive testing to your home. According to the PWC report for the DBH July 2009, weathertight failure rates by type of cladding for dwellings built 1992 – 2005 are:
- Monolithic – EIFS polystyrene 80%
- Monolithic – stucco 95%
- Monolithic – fibre cement (flush finished) 80%
- Plywood, fibre cement (with battens) 80%
What should I do if I have a leaky building?
If you have a leaky building, or suspect that you do, the first thing that you should do is register your property with the Weathertight Homes Resolution Service of the Ministry of Business Innovation and Employment. There are some strict time limits for making a claim for weathertightness defects and registering your property with WHRS stops time running for the purpose of making claims under the WHRS Act. Once you’ve registered your property:
- Engage your own building consultant to provide an assessment of the scope of the problem and the cost of repair; and
- Seek legal advice on your potential claims against those responsible for the defects. Grimshaw & Co is the leading law firm acting for leaky building owners in New Zealand, and can help you through the process
- If your home is part of a Body Corporate, immediately advise your Body Corporate Secretary
Is there a time limit within which I can bring a claim?
There are two time limits you need to be aware of that can prevent you bringing your claim successfully. Claims can only be made within:
- 6 years from the date the defects became reasonably discoverable; and
- 10 years from when the building work was carried out, irrespective of when the defects became reasonably discoverable.
If your home is nearly 10 years old, and you suspect there may be a problem, register your home with the Weathertight Homes Resolution Service immediately, and seek legal advice.
Who is to blame for leaky buildings?
Blame for the leaky buildings crisis spans everyone in the building and construction industry: the Building Industry Authority (the central government agency responsible for overseeing the industry); the Councils and private certifiers who were responsible for ensuring that building work complied with the Building Code; the developers the architects/designers; the engineers; the builders and subcontractors. Getting them to take responsibility is the difficult part, and that’s where we are able to help you.
What is the Government doing about leaky buildings?
The Government, through the Ministry of Business, Innovation and Employment operates the Weathertight Homes Resolution Service (WHRS) which provides advice and assistance to leaky home owners and produces low cost reports on homes by its assessors. The Government has also established the Weathertight Homes Tribunal (WHT) which adjudicates leaky home disputes and the Financial Assistance Package (FAP) by which Government and Councils may contribute up to 50% of the cost of repairing leaky homes in certain circumstances.
Has the leaky building crisis happened elsewhere?
The problems in New Zealand are similar, both in cause and result, to the “leaky condo” crisis in Canada in the 1990’s.
I’m thinking of buying a property that was built in the last 20 years. How do I know if it is leaking and how do I protect myself?
If you’re thinking of buying a property that was built in the last 20 years, we recommend that you:
- Ask the agent and the owners whether they have any knowledge of any problems with the building leaking – they have no obligation to disclose this information unless you ask. It is preferable that this it recorded in writing.
- Make the contract conditional on obtaining a pre-purchase building report from a properly qualified building consultant that is acceptable in all respects to you. Under no circumstances waive or modify this condition. If you do, you could be accepting responsibility for any problems that could have been detected by this inspection.
- Make the contract conditional on obtaining a Land Information Memorandum (LIM)
- Ensure that you look at the Code Compliance Certificate (CCC) held by the Council which should be supplied with the LIM Report. If the report shows that the CCC was issued by a private building certifier, as opposed to the Council, you should consider carefully whether you want to proceed with the purchase. This is because:
- It is unlikely that you will be able to sue the Council if there is anything wrong with the property; and
- There will be no ability to recover anything from the private certifier – they have all ceased trading and no longer have any insurance cover for claims against them.
If you are buying a leaky building with knowledge of the defects, you should realise that it is unlikely that you will be able to recover any of the costs of repair from the people responsible unless you purchase the vendors right to sue those people at the same time. You should seek specific legal advice on this issue before you proceed with the transaction. Be aware: The right to sue automatically does not go with the ownership of the property.
I own a leaky building and am thinking of selling it. Is there anything I need to know?
If you are selling a leaky building there are a number of warranties in the standard sale and purchase agreement that could make you liable to the purchasers for the cost of repairs. Before you put the property on the market for sale, seek legal advice so you know exactly the form of the agreement and what you need to disclose to a prospective purchaser. Your real estate agent is not qualified to give this advice.
What is the Weathertight Homes Resolution Service?
The Weathertight Homes Resolution Service
is a government agency set up under the Weathertight Homes Resolution Service Act to provide assessments of leaky residential homes, with the aim of determining if they qualify for assistance under the Act. If they do qualify, the service provides low cost reports by its assessors and provides mediation assistance.
What is the process for bringing a leaky building claim?
You bring a claim before the Weathertight Homes Resolution Service by registering online
, or by contacting the WHRS at: Phone: 0800 116 926 (weekdays 8.30am – 5pm) Postal address: Ministry of Business, Innovation and Employment PO Box 10-729 Wellington 6143 New Zealand
I have a WHRS report with an estimate of costs of repairing my leaky home. Can I rely on that?
WHRS Assessors Reports are not intended to provide you with an accurate assessment of what it will cost you to repair your leaky home. You cannot rely on the amount stated in the Report to be an accurate estimate for the purposes of settlement at a mediation or adjudication. You should obtain you own assessment by obtaining a proper scope of works from a building consultant and a quote for the work from a qualified builder.