Bob Clarkson MP
National Party Associate Building and Construction Spokesman

20 November 2007

Leaky homes come back to haunt house sellers

A clause in real estate contracts can cost unwitting house sellers hundreds of thousands of dollars many years later, says National’s Associate Building and Construction spokesman, Bob Clarkson.

“I have just had a case brought to my attention where a woman had a house built in 2002. She lived in the house for two years and then sold it in 2004. In 2007, the new owner found that the house was leaking and sued the original owner for repairs.

“Normally, the original owner would then hand the claim on to the builder of the house, but in this case the builder had gone broke and closed his company.

“What the original owner didn’t know was a clause in the sales contract made her liable as ‘the last one standing’.

“The woman had sold her house in 2002 for $270,000 and now faced a bill of $210,000 for repairs.”

The Eighth Edition 2006 of the ‘Agreement for Sale and Purchase of Real Estate’, section 6.0, ‘Vendor’s Warranties and Undertakings’, states:

• 6.2(6) where under the Building Act any building on the property requires a Compliance Schedule

• (6)(a) the vendor has fully complied with any requirements specified in any compliance schedule issued by a territorial authority under the Building Act in respect of the building

“While this clause was originally included to cover new owners against buying a building that had been extended without consent, lawyers are now using it to attack previous owners for leaky home liability when the builder has gone broke.

“This is a real case of ‘buyer beware’. I am urging all sellers of real estate to have this clause deleted.

“This exploitation of innocent home sellers is a direct result of Labour’s disgraceful progress on addressing the leaky homes issue.”

ENDS

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