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Home owners pocket compo

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  • Home owners pocket compo

    Home owners pocket compo
    27 November 2005

    Homebuyers beware - many homeowners are selling their leaky houses to unsuspecting buyers without fixing them, but pocketing the money they were given to do so.

    Details released under the Official Information Act confirm at least one homeowner received a payment to fix the house, then sold it, leaving the new owner to file a fresh claim.

    "That has been happening," said Bernie Fuller, former chairman of the Leaky Homes Action Group. "People quite frequently haven't fixed up their houses."

    Others sell their houses without completing the settlement or fixing the leaks. Weathertight Homes Resolution Service (WHRS) figures show 43 houses have had complaints filed by more than one owner.

    It is not clear whether the first claimants told the new buyers of the problem before they sold it, but Fuller thinks in many cases they do not.

    Claims to the WHRS are confidential, and buyers do not know if a house has a claim against it. Details of many settlements between home owners and developers are also secret, unless the council chooses to note it on the property information.

    Fuller knew of houses with three or more changes of ownership where people sold the house without laying a claim or telling the buyer it was leaky. "People just want out. They think: `God, there's a problem here.' They've heard of the high risk attached to their home."

    Fuller said many settlements were 60%-70% of the cost of repairs, and owners were unable to get the leaks fixed.

    "They don't know the cost and get a settlement of $100,000 and find it comes to $150,000. They don't have the money so they pocket the $100,000 and sell their home." Cabinet papers released last week reveal the government estimates 15,000 homes could be damaged by leaks, at a cost of $1 billion. So far, 467 have been resolved through the WHRS.

    But the report admitted there was no way of knowing how many leaky homes had been repaired with the compensation. There is no requirement for it to be spent on fixing leaks.

    National MP Nick Smith said the government should do more to ensure homes were repaired.

    "There's far too much focus on privacy and secrecy rather than on fixing the houses and ensuring future home owners can have confidence that the houses they buy are sound."

    Auckland Law professor Bill Hodge said such cases were the "classic problem" of a victim paying good money to a thief. "The person who takes the money and doesn't fix it and runs is a crook."

    The house owner could sue the seller for misleading and deceptive sale.

    Hodge said most settlements now included a clause to ensure the money was spent on fixing the house.

    Wellington lawyer Chris Street, who fought his own leaky home battle in the High Court this year, said the system should be more open.

    Street won $815,000 for the costs of fixing his home plus compensation for stress. But he said most homeowners would not have the skills to fight for the cash to fix their home.

    He said the system should be more transparent so the public knew what sort of settlements were being made and could push for a better deal.

    WHRS national manager Nigel Bickle said the Department of Building and Housing was reviewing the service, with a focus on encouraging homeowners to get their houses repaired quickly.

    He said house hunters should get a building report before buying any property.

    "It's going to be for most people the biggest purchase that they make. It is wise for buyers to get inspection reports done."

    Fuller thinks claims and settlements should be made public, so others know the history of the house.

    "For the protection of the buyer something should be on the LIM report."

    Last edited by muppet; 27-11-2005, 08:55 AM.
    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

  • #2
    This happened also with Weatherside in the 70's. There are still a lot of houses in the Country, clad with rotting Weatherside. Owners received the compensation, flogged their house and scarpered with the loot.

    I would advise anybody, looking to buy such a house, only to purchase the property at a VERY low price and then completely replace the weatherboards with a totally different product.

    There is a stigma attached to houses with Monolithic Cladding and Weatherside, change the cladding and you'll eliminate that stigma and have a very saleable house.