Both my apartment, and my neighbour’s apartment, are suffering significant water ingress as a result of a defect from an external wall. The management company has agreed to fix the source of the leak, and repairs to the external wall are currently under way via scaffolding and so on. It is refusing to carry out internal repairs to my apartment, however, stating it does not carry out internal repairs and that we can submit a claim through the block-insurance policy.
Given the water ingress is originating from a common area, is the management company responsible for internal repairs? The lease/management agreement is silent on this point. The damage is significant, affecting two rooms and making them almost uninhabitable. An estimate received to repair one room details stripping and packing walls, and so on, and is for €6,000. I expect the second room will cost the same.
There is an excess of €5,000 on the insurance policy and my experience has taught me that insurers do not pay out for building defects. In any event, I do not feel this should be the solution. Does the management company have any responsibility for internal repairs, and if so, how can I compel it to carry out same?
Block-insurance policies that are held in the name of the owners’ management company (OMC), cover certain unforeseen risks, but do not cover latent defects and are unlikely to yield any relief for you. Latent Defect Insurance would be the policy to submit your claim under if it exists, and cover extends beyond the repair of the defect itself. This policy would traditionally stand for 10 years from completion of the development with only five years available to claim for say a Homebond policy.
The OMC is responsible for the common areas and its performance if responsibility for these areas has been transferred from the development company. The ability of your OMC to rectify the damage to your property would be affected by many factors anchored in pragmatism. Where the common areas are not transferred you may be able to make a claim against the development company who remains the owner of the common areas. Litigation would be costly, time consuming and exhausting in either scenario where no agreeable resolution is obtained. Evaluate and compare the cost of litigation to that of the remedial works involved.
It is not uncommon for OMCs to hold an insurance policy for the development even when the common areas have not yet transferred and remain in the ownership of the development company. This is because of the failure to transfer the common areas from the development company to the OMC. Section 5 of The Multi-Unit Developments Act 2011 requires that as of October 1st, 2011, all common areas should be vested in the OMC.
There is a planned scheme to fund the fixing of defects in apartments built between 1991 and 2013. This system is being rolled out at a time when local authorities are only required to inspect 12-15 per cent of new buildings notified to them.
This is a dangerous failure in policy, and the current cost of remediation is expected to be €5 billion for mica, pyrite and apartment defects combined. Many expect this figure to balloon even further. Increasing the statute of limitations and introducing a system of proportionate accountability as well as accessible and cost-effective relief from the responsible parties of construction defects is greatly needed.
Paul Huberman is a chartered property and facilities manager and a fellow of the Society of Chartered Surveyors Ireland
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