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Defects in new homes - what recourse?

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16 Jan 2013

There are sometimes cases where a new home is built, things go wrong with the structure and on trying to get the NHBRC to compensate for the damage or repair, the owners think that there is no recourse if the NHBRC refuses to pay. 

The Housing Consumers Protection Measure Act 95 of 1998 (HCPMA), which is intended to protect the owners from poor workmanship if the builder is registered with the NHBRC, was called into effect. The provisions of this Act include a warranty against certain types of defects in new homes.

This is according to Lanice Steward, managing director of Knight Frank Anne Porter, who says in a recent court case mentioned in a Smith Tabata Buchanan Boyes update, Stergianos v National Home Builder Registration Council, where the plaintiff turned to the NHBRC for compensation for cracks that appeared in the floor slab of his home after having no success in getting the repairs or cost of the repair from the original builder, it was shown that there are ways of resolving the matter. 

Initially, the NHBRC refused the owner’s request and argued that it was not structural but shoddy workmanship, even though an independent civil engineer called in to determine the cause of the cracks had said that they were structural.  

The Housing Consumers Protection Measure Act 95 of 1998 (HCPMA), which is intended to protect the owners from poor workmanship if the builder is registered with the NHBRC, was called into effect. The provisions of this Act include a warranty against certain types of defects in new homes. 

This home was built in 2005 and the cracks appeared after just one year, which falls within the stipulated warranty period mentioned in the Act.  

Section 17(1) of the Act stipulates that the Council must make a payout to rectify any “major structural defect? manifested within five years of the date of occupation, if: 

  • it resulted from non-compliance with the NHBRC Technical Requirements and the home builder has been notified accordingly within that period;
  • the home builder is in breach of the home builder's obligations to rectify the defect;
  • the home was constructed by a registered home builder and the home was enrolled with the NHBRC; and
  • the home builder no longer exists or is unable to meet his or her obligations. 

The term “major structural defect" is defined in section 1 of the Act as “a defect which gives rise or which is likely to give rise to damage of such severity that it affects or is likely to affect the structural integrity of a home and which requires complete or partial rebuilding of the home or extensive repair work to it, subject to the limitations, qualifications or exclusions that may be prescribed by the Minister”. 

In this particular case, the engineer established that the cracks were caused by shrinkage of the slab, due to the builder failing to place expansion joints in it.  

“The courts found in favour of Stergianos and even though the NHRBC has had negative press, it is important to know that the courts will give the homeowner protection if things go wrong. This case shows that the courts will often seek the best result,” says Steward. 

Like all insurance, it might be expensive at the time of building to be covered by the NHBRC but it might be a lot cheaper later, as many things can go wrong in the space of five years of building a home, and it’s best to be covered in these instances, she says.   

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