The Rotten Truth

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Leaky home facts and figures regularly appear in news headlines. Often times we discount them, casually shrug, or even have a moan about the cost to the taxpayer. But what happens when it turns out that the leaky home belongs to you? By Karen Pasco

It was a phone call three years ago which completely turned the lives of Auckland couple Bruce and Meryle Kenny upside down.

The call came from the Auckland City Council and the news the couple were receiving down the line was absolutely unimaginable. “The council rang to advise the building was non-compliant. I rejected the assertion saying I had documented proof from council advising the building was code compliant. Despite this the council required that I allow inspectors to come onto the property to investigate and inspect the building,” Bruce says.

The couple built their house in 2000. It was their dream home, the home they would spend their retirement years in after working for another five to 10 years. A huge amount of thought and planning had gone on during the conceptual phase of the development.

“We were able to generate our own needs and wants for the building including all fittings and colours. We changed very little from the architects first conceptual drawings. He interpreted our wish list and ideas exactly first time round. We loved the design and still do.”

The builder was recommended by the architect and at no time during the build did the Kennys have any inkling things were not being done correctly. “There were no signs during the process that anything was amiss, but of course we put our faith in the competency of the architect and builder – who were we to know any different. We loved our home and experienced not one ‘leaky home’ incident, but it was all going on inside the walls without us knowing.”

The building process had followed normal protocols. It had been signed off by council, which had issued a building consent and council staff had carried out all of the inspections throughout the construction phase – which were all passed. It was only a council administrative error that meant the Code Compliance Certificate was not issued until 2008, Bruce says.

The Kenny’s were proud of their home. Others who visited commented on the impact the Meadowbank property had on first sight. It was like all homes; a place where friends and family gather, where celebrations were held and where memories were made. So when the phone call came it was met with confusion and disbelief.

After being advised by council that the couple’s home was non-compliant, they were then hit with a barrage of council notices, more than 26, to fix it. “At that point there was no indication the building was leaking. Nevertheless that action by council effectively condemned the construction.”

An investigation by qualified specialists soon ensued and revealed the true internal damage. The house was rotting from the inside out.

rotten

It was pure co-incidence that, shortly after the discovery of their plight, a TV programme featured a man who had gone through a similar situation. “Meryle and I were fortunate, no – very fortunate, in viewing a television programme on leaky homes featuring HOBANZ (Home Owners and Buyers Association of NZ) president John Gray. He articulated the plight of people in similar situations as ourselves. On viewing that programme Meryle suggested that contacting John might prove useful.”

The nationwide leaky home problem was the catalyst for HOBANZ’s creation. The not-for-profit organisation provides education, advocacy, independent guidance, support through mediation and litigation and provides comprehensive solutions to homeowners.

As it turned out John Gray is an Air New Zealand pilot as is the Kenny’s son. Bruce and Meryle’s son contacted John to arrange a meeting; “the rest in that regard is history,” Bruce says.

What soon became clear was that Bruce and Meryle were running out of time. Martelli McKegg Lawyers property and construction law partner Lisa Gerrard explains; “Homeowners must commence legal proceedings within certain critical time frames called limitation periods. Once these limitation periods expire, the ability to take legal action is lost.”

The Kennys were nearly at the 10-year threshold and if they’d chosen to continue dealing directly with council themselves, would have missed the chance to take those concerned to task.

“Rightly or wrongly I felt council’s involvement to that point was destructive and bullying at best,” Bruce says. “Certainly had I pursued the direction using council’s input, we would have gone beyond the 10-year threshold and that would have effectively voided their liability in the matter.”

With HOBANZ’s and others help, the Kennys were able to establish the basis for a claim in “quantity and quality”. “This required a good deal of legal and expert advice from people in the leaky home industry. At all times HOBANZ, in the form of John Gray, was our advocate. There is no doubt that John’s advice in every respect is what maintained our sanity and wellbeing, providing the best outcome possible in an incredibly difficult environment.”

Lisa says it is important a homeowner should contact a lawyer as soon as possible if they suspect they may have a leaky home – preferably one with specialist knowledge in the area.

“This is a unique and rapidly changing area of law. It is important to deal with a law firm that stays abreast of legal developments in this area, has the experience to read new law in the correct context and is familiar with the strategies and tactics of the other parties involved in this type of litigation,” she says.

Lisa, along with other specialists in the field, work together to ensure homeowners get the best solution. Because each individual’s case can have many of its own intricacies, a “one size fits all” solution does not work. “Specialists need to work together to propose solutions that recognise an owner’s unique financial and emotional state.”

A more recent development in the leaky home saga is when the repair work also fails. “More and more people are finding that their homes are failing for the second time because the first round of repairs were carried out inadequately; failed to address all of the issues; or both,” Lisa says.

“A new wave of litigation against the council is now emerging as a result of houses failing for a second time. We assist home owners through the remediation process by reviewing the construction documents to ensure that the wording of the documents won’t preclude them from taking action if the repairs fail. If we are contacted in the very early stages, we can put homeowners in touch with reputable project managers and remediation specialists. To minimise the risk of the remedial work failing down the track.”

As they say, prevention is always better than cure and homeowners can also undertake steps to ensure they take full precautions when buying a home. Lisa’s advice is that all purchasers should invest in a comprehensive building inspection report from a reputable company.

Three years after that first phone call, the Kenny’s repair is underway. The repair has taken three months so far and the whole remediation process has cost about $400,000 – more than the house initially cost to build. Those long-made plans of retirement are now further off as Meryle continues to work to pay off the mortgage they never imagined they would have at this time of life.

For others going through a similar situation, Bruce urges for them to get qualified and informed help. “My recommendation is a visit to HOBANZ. From my experience there are many out there whose motives are more focused on their self interests and often not qualified to provide the level of expertise required to go down this torturous path. Equally HOBANZ is a not-for-profit organisation and was formed by people who had been through the traumatic leaky home experience.

“Obviously this has had a huge impact on us, not only financially, but physically and emotionally, given what this does to our security in retirement which we have worked very hard for. We face a mortgage at the very end of our working life when prior to this we were in a home we loved and looking forward to retirement and spending some time together. My wife jokes that it is just as well there is a Zimmer frame ramp at her workplace,” Bruce says.

Despite the hardship they have faced during the past three years, the Kennys are also thankful. They are thankful of the contribution others have made to make sure they will be able to continue to live safely in the home of their dreams. “John and HOBANZ’s influence with our claim was and still is huge – a lifeline, a saviour, a good Samaritan. John Gray and HOBANZ saved our sanity.”


Uncovered the truth about leaky buildings

The building boom of the 1990’s saw a change of legislation and deregulation which, combined with the haphazard approach to building and design and a less than adequate consent and sign-off process, led to what is now known as the leaky building epidemic.

“New building materials were introduced which weren’t tested in New Zealand conditions. Plaster and fibre cement board became a popular cladding choice. The combination of these, together with a decline in building skills and loosening of regulations, such as the use of untreated framing timber, led to a systematic failure,” says HOBANZ (Home Owners and Buyers Association of New Zealand) chief executive Roger Levie.

Up to 110,000 homes may be affected by weather-tightness issues, with the cost of remediation estimated to be around $30 billion.

What’s being done to resolve the situation?

The public has been blasted with news about leaky buildings and how devastating they can be. Journalists love to flaunt videos of owners watching their homes being pulled down and photos of ugly, mould infested timber but these “reports” are brief and infrequent. The reality is very little has been done to help those dealing with their leaky and defective homes.

The Labour Government commissioned the Hunn Report in 2002 to understand the causes of the leaky building problem and introduced the Weathertight Homes Resolution Services Act which was subsequently replaced by the 2006 Act.

When the National Government came into power in 2008, they engaged Price Waterhouse Coopers to estimate the likely number of homes affected and the cost to repair. The Government then announced a financial assistance package for leaky home owners.

Under this package an owner who meets the criteria set down by the Government will receive a contribution of 25 percent or 50 percent (where a local council was involved) of the “agreed repair cost” provided they are able to prove their ability to fund the balance of the repair cost.

The reality

Despite all the information floating around about leaky homes, owners faced with the problem more often than not find themselves lost, searching for answers to a situation they never expected to be in.

“The first reaction for most people is disbelief. Understandably a lot of people bury their heads in the sand.” Roger explains. “It’s hard for an owner to accept that the home which is their safe haven is failing around them and that it will cost so much to repair.

“Often owners discover one small area of water damage and believe they can fix the situation. But then the problem spirals as they start investigating and this is when they realise they need help finding answers.”

Roger went through the process himself and knows only too well the emotional distress brought on when you discover that your home is leaking. Not only can owners find themselves living in unhealthy and unsafe homes, there is also the financial impact which can be devastating.

For those who own a unit in an apartment complex the situation can be even worse. “If you’re in a body corporate everybody needs to agree on the way forward. You are totally reliant on your neighbours being able to fund their share of the repair costs before the building can be fixed.”

Unfortunately the media coverage of the leaky building epidemic has had a knock on affect on homes built within the high risk period, when materials that are now known to fail regularly were used.

“Even if your home isn’t leaking, if it was built during the high risk period and has features such as plaster cladding, no eaves or cavity and a Mediterranean design, then it is likely that its value will have declined significantly.”


The Colleen Dicks project

In 2007, after a four year battle with Waitakere City Council, retired school teacher Colleen Dicks won a $250,000 judgment in respect of her leaky home. However, the victory was short lived when Colleen realised that the majority of the awarded sum would be eaten up by legal and expert fees, leaving little left for her to repair her home.

To generate public awareness of the issues faced by many leaky home owners, HOBANZ stepped in and facilitated the rebuild project. The project took considerable effort to bring together sponsors and donors at a time when the industry was suffering one of its most severe downturns in building activity. Fifty three sponsors came together to help HOBANZ rebuild Colleen’s home. These companies and individuals provided their goods and services free of charge or at significantly discounted prices.

In mid 2009 Colleen Dicks’ home was demolished. It had suffered from serious moisture ingress and the resulting damage had got to a point where the only viable option was to demolish the house and
start again.

The team worked together to design and build the new home. The house incorporates steel frames, mono-pitch roof, aluminium cladding and the latest window technology ensuring a weather-tight home. “We wanted sustainability – low operating and maintenance costs, good ventilation, ambient temperatures and clean air; secure elements like fire sprinklers and smart energy and security management. In other words a lovely, modern, healthy home” says John Gray, President of HOBANZ.

How do you know if your home is leaking?

“Many people believe that leaky buildings will have water running down the walls however this is far from the truth. In fact the tell-tale signs are often well hidden until it is too late.” Roger explains.
“As a guide we would suggest that you check the exterior of the property for hairline cracks in the plaster, particularly close to windows and doors; ensure there is clearance between the cladding and the ground; check for any gaps around joinery seals or penetrations such as meter boxes, pergolas and pipes.
“Inside the building a damp aroma, swollen skirting boards and floor coverings showing water damage are all possible indicators of water ingress. On our website www.hobanz.org.nz home owners are able to download a weather-tightness risk features brochure which explains what to look for.”

What’s the solution?

HOBANZ believes the best solution can only be achieved through a team approach. Whether the home owner is eligible for the government’s financial assistance package (FAP), wants to take legal action against those responsible or is simply resigned to the fact that they need to repair their home, they will require a number of professionals to work with them.

These include a building surveyor to investigate what water ingress the home has suffered and to provide guidance on timber replacement. They will also need a designer to create a plan and a builder to carry out the repairs and, if they have a legal claim worth pursuing, they will need a lawyer. But these individuals need to work in partnership if the best outcome is to be achieved and value and quality are to be restored.

“Each professional involved needs to be proven in the area of weather-tightness. The building surveyor’s role is not only to assess the damage the building has suffered, but also to identify the parties who may be responsible.

“If the home owner intends to litigate, the building surveyor will be their expert, providing evidence and countering any arguments other parties may put up. Similarly the legal representative needs to be experienced in bringing claims in both the Weathertight Homes Tribunal and the Courts; a designer needs to understand weather-tightness features and a builder must be competent to carry out the necessary repairs,” Roger explains.

“It is the bringing together of these people to form one cohesive team that is key for the home owner. While each party plays an individual role, a team approach will ensure a successful outcome.

“This is where HOBANZ is able to help – we bring together and co-ordinate the team to ensure the home owner receives the best advice, expertise and result.

“A leaky home owner’s trust in the building industry as a whole has been severely undermined as a result of the situation they are in. They need to be able to trust again and it is up to these new parties to re-establish that trust.

“By working together and developing a sound strategy they can repair the home and regain the owner’s faith in the building industry.”

For those home owners who simply own a property that looks like a leaky building, HOBANZ says; “Our advice generally for owners in this situation would be to plan for a reclad of the property in the not too distant future. While this may be costly, recladding the home should restore, or even enhance its value if you go about it the right way, and may put you in a better financial position overall than you would be if you sold the property as is.”

“The advantage for owners in this situation is that they are able to plan and save up over a period of time to reclad their home, knowing that the value in their property will be restored.”


The right resolution

When an Auckland couple approached HOBANZ with their leaky building dilemma Roger Levie’s initial concern was to establish what the couple’s priority was.

“They were a young couple with a small child who wanted to get their home fixed. We estimated the cost of the repairs meant the couple would need to borrow more than $300,000 – a considerable sum given their personal circumstances.

“It would have had a huge impact on them, especially if they didn’t get back what they hoped for when they tried to recover the money from the original builder and council,” Roger explains. “The added stress of sizable interest payments could easily have lead them to accept a lower amount to settle their claim simply to put an end to their ordeal.

“We discussed the options available and, in partnership, devised a strategy which saw them proceeding with litigation first.

“At first the bank were not prepared to lend the couple the money for litigation however when we (HOBANZ) arranged a meeting with the owners and their bank to explain the reasons why claiming before repairing was the best strategy for the family, the bank agreed to lend the money.”

HOBANZ then helped the couple engage a law firm to best represent their interests in the litigation process. The claim was recently settled at mediation and they are now in a much better financial position to repair their home minimising their reliance on further borrowing.

“Every situation is different and needs to be looked at individually. In this instance, the strategy HOBANZ advised the owners to take minimised the couple’s stress and their financial exposure was greatly diminished. By engaging a team that works together our aim is to reduce the financial and emotional impact any home owner suffers in this difficult situation.”


Working together to solve the problem

What has become apparent through the whole process is that in order for leaky buildings to be remediated, trusted and experienced service providers must be used. Often this means service providers work in partnership to provide customers with the best solution within budget constraints.

For a recent recladding project in Orakei, Allied Exteriors Ltd found itself with the challenge of having to finish the project quickly within a tight budget.

Financial constraints did not allow for full weather protection of the dwelling using normal shrink wrapping methods. Allied Exteriors were aware that U-Shrink had brought innovative solutions to other weather protection projects and contacted them to help solve the dilemma. In short, U-Shrink was able to craft a perfect solution for Allied Exteriors and the homeowner.

U-Shrink owner Matt Trayes, who is a qualified New Zealand builder and ex super yacht captain, has worked with shrink wrapping products for many years. For the Orakei project, he looked closely at what Allied Exteriors were doing from a building and construction perspective and noted there were minimal changes to the roof. From that he was able to create a cost-effective weather protection structure.

Instead of having a massive scaffold structure built over the whole dwelling, U-Shrink proposed a level of weather protection that saw its plastic film product shrink-wrapped directly onto the existing roof – a methodology that U-Shrink has pioneered in the Christchurch rebuild.

This innovation required scaffolding need only be built up to spouting height on the house allowing for considerable cost savings associated with scaffold construction and long-term hire. This method of weather protection is also far quicker to erect and to disassemble at the end.

Head of the Allied Exteriors project Steve Jameson was delighted with U-Shrink’s response to its problem in terms of innovation, service delivery and cost benefits. Steve plans to use U-Shrink for another pending recladding project saying;“we never had a single down day on the Orakei job when working under U-Shrink’s weather protection”.

The benefits realised on the Orakei project can be especially applied to leaky building remediation work. Homeowners undergoing significant leaky home repairs can ask their builders about involving U-Shrink at the beginning of the project, to ensure it can develop design solutions that are operationally effective for the builders and cost effective for the home owners.

Allied Exteriors and U-Shrink had a very complimentary partnership on the Orakei project. Trayes says; “The powerful combination of our building knowledge working in partnership with the home owner’s builder has resulted in a weather protection system that the parties did not think possible at the start.”

Allied Exteriors are specialists in recladding, exterior plastering and painting.

Allied Exteriors, 19A Triton Drive, Albany, Ph: (09) 479 8901, www.alliedexteriors.co.nz
U-Shrink, PO Box 303 175, North Harbour, Auckland, Ph: 0508 333 777, www.ushrink.co.nz


The future

Despite changes to the Building Act, there is no guarantee that new homes will not suffer from design and building flaws. The arrival of new products and the push to build cheaper will always provide a risk when building. “The focus for the building industry, as a whole, needs to be on delivery of a quality product while consumers need to be thinking about value rather than just price, price, price,” Roger warns.

“Consumers need to realise that they should not just assume the house they are buying is going to last the distance.”

“Simply because a home is newer does not mean a purchaser is protected either. They still need to do their own due diligence to ensure the property they are interested in purchasing is sound. Sadly these days we just can’t just rely on the system to protect us.”

Home Owners and Buyers Association of New Zealand (HOBANZ)

HOBANZ is an independent organisation set up to represent the interests of New Zealand home owners.

HOBANZ is able to share knowledge that has come as a result of helping hundreds of owners deal with their leaky and defective homes. Working alongside building surveyors, lawyers, builders, architects, banks and lending institutes, insurance companies and other service providers, HOBANZ develops strategies and gives guidance to support home owners who find themselves in what sometimes seems like impossible situations.
Working through the available options HOBANZ brings together the relevant parties to ensure the home owner has a team who can restore their home.
HOBANZ not only helps those who have leaky buildings, but all home owners. The organisation’s Project Assist service helps owners repairing, renovating or building new homes. By using the service, home owners have access to knowledge gained from extensive building experience, can ensure builders and service providers are trustworthy and that contracts are in the best interest of the home owner.

For more information on leaky buildings visit www.hobanz.org.nz or call the team on (09) 360 8083.

Tell-tale signs of a leaky building:

Exterior

  • Cracks in plaster
  • Blistering or flaking paint work
  • Stains on cladding
  • Faulty or leaking windows and doors
  • Inadequate ground clearances
  •  Faulty decks or roof.

Interior

  • Skirting and architraves swelling and cracking
  • Leaking windows and doors
  • Mould build up on the window liners
  • Mould on the inside of drapes
  • Carpet and floor coverings showing signs of water damage
  • Flooring that has swelled
  • Pull up the carpet near the joinery and look for rust marks on the carpet fixings
  • Swelling, cracking and popping of wall linings

Author: fatweb

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