Property problems: Quality concerns when buying 'off the plans'

Q. I am interested in buying an apartment "off the plans", but have building-quality concerns. Are there new standards to avoid another "leaky building" crisis?

A. Amendments to the Building Code have been proposed to address the "leaky building" problem. They include durability requirements for timber and timber treatment, and external moisture rules.

Also, the Building Bill (in force by next July) is designed to reform the building industry to address concerns arising from the leaky building crisis. A regulatory framework for building work, practitioners and products is intended to ensure that buildings are built right first-up.

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Q. Will these standards be enforced?

A. Yes. Building Consent Authorities (as they are termed in the Building Bill) must check that code requirements are met both when issuing building consents before construction work starts and code compliance certificates once the work is complete. If an authority finds any code-requirement failures, it will withhold the consent/certificate until everything is code-compliant.

The Building Bill also establishes a board, responsible for licensing and disciplining building practitioners.

If standards are failed to the extent that building practitioners can be considered negligent or incompetent, they risk disciplinary action by the board. This could include cancelling their licence.

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Q. Are buildings now under construction subject to any new regulations or are they being built under the old regulations?

A. There will be new regulations accompanying the new Building Act, however buildings under construction (ie undertaken before the regulations are made) are subject to the existing regulations (although greater focus is being applied by all involved).

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Q. Is there any way of finding details about a builder's past projects, including maintenance records?

A. Not at present, other than word of mouth, and your own detective work (eg internet searches for anything about the builder or publicity about his projects).

However, under the Building Bill, building practitioners will be licensed and a register of licensed practitioners set up. It will be available to the public and will show if a practitioner has been disciplined in the past three years.

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Q. Is the builder liable if the construction deviates from the original specification or is not up to a reasonable standard?

A. If you engage a builder to construct a home, you will have a contract and the builder will be liable to you if he breaches the contract and does not meet the specifications. Any contract will have implied into it that construction has to be in accordance with codes and regulations.

But, if you are buying an apartment, it is unlikely that you will have a contract directly with the builder. More likely, the builder will have been engaged by the developer of the apartments/owner of the land who sells your apartment to you.

Your contract will be with the vendor/developer. However, the builder may still be liable to you under his general duty to take reasonable care in construction, using good workman-like practices.

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Q. Is there a way of insuring against "leaky building" syndrome-type problems?

A. The parties involved in the construction (eg the builder, architect), will generally have their own insurance cover for the construction. Whether this covers any "leaky building" problems on a development depends on the terms of the policy.

Often policies contain exclusions, such as for defective design and materials.

An owner generally won't be able to take insurance against things that occurred during construction, such as inadequate design or building methods.

However, you can have a surveyor inspect the building before purchase, or insist as part of your purchase agreement that the architect provide a certificate that your house or apartment is practically complete.

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Q. Where can I get sensible advice about multi-storey apartment construction?

A. When buying off the plans, you cannot have any sort of physical building inspection done. However, a surveyor, architect or engineer can advise you and review any plans or technical documentation such as the specifications. Legal advice should be sought on the terms of any agreement.

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Each week the Commercial Property Group at Simpson Grierson will answer questions on commercial property issues. The information in this column is intended to provide general information in summary form current at the time of publication. The contents do not constitute legal advice and should not be relied on as such. Specialist legal advice should be sought in relation to specific issues.