Posts Tagged ‘how to prevent buying a leaky building’
Leaky Buildings are an extremely topical issue at present. There are so many home owners and investors in New Zealand that have leaky buildings, and the costs to repair can be astronomical. Leaky building issues cause a lot of stress and there a lot of uncertainty around the issues. As a result I couldn’t think of anyone better to answer these questions than the Managing Director of Step Up Group, Ian Holyoake. The Step Up Group have been around a long time and have excelled nationwide in providing leaky building owners, body corporates and other interested parties with state of the art technologies, in Building Weathertightness Risk Managment, Building Inspection & Monitoring, Property Planning, Remediation and Dispute Resolution.
In light of the Leaky Homes Compensation Plan announced by the Government, and my comments in leading global newspaper, the Telegraph, I wanted to get some clarity on more of the issues surrounding leaky homes. As a result we have the following guest blog from Ian Holyoake, answering two questions:
- How to do the right due-diligence to prevent buying a leaky building?
- How to fix a leaky building?
How to do the right due diligence to prevent buying a leaky building?
Let the seller provide you with what could be termed ‘proof of product’ – remember the Russell Crowe & Meg Ryan movie Proof of Life – if a seller is serious they should table openly the state of the building – why should you pay to have there building tested. What you should ask for and in this order is:
- What treatment does the framing have? Poorly treated timber is what is rots from leak events. Therefore a robust building is one with high durability protection. Regrettably treatment levels have been reducing since the late 1970’s so its hard to find well treated timber outside our old State Homes. So settle for H3 (tanalised) or highly treated boron. I have underlined ‘highly’ as this is referenced to levels like the current standard H1.2 which equate to boron concentrations of 0.4% BAE which are useful to slow down rot for around 5 years only – so if the building is more than 5 years old more information is needed. I require at least 4 samples for testing from each elevation and each floor level including studs, base plates and lintels as timber is often mix and match – timber supplies are not consistent with deliveries. Get the owner to supply these test results and if they don’t have them organize for them to be done at the owner’s expense – why should you pay for testing there home?
- Is the wood decayed? Unfortunately every building leaks so those constructed with perishable wood will already have some decay in them. The secret is finding where the damage is and then determining whether the decay warrants major cost to reconstruct. It’s not illegal to have decayed framing – but if it could collapse and cause harm then council has a duty to issue a safe and sanitary to protect the occupants. The rule is its stupid to get yourself into this situation so ask for sampling results. Samples of framing can be examined (without destruction) taken from Mdu PROBE installations under every ‘at risk location’. The at risk locations are the same places water would accumulate if the building leaked – and buildings leak where complicated details are eg decks, flashings, roof and wall connections, penetrations through claddings, internal gutters, hidden gutters, high ground lines, cracks etc so obviously the more complex the more sampling is required. An average building requires around 80 samples, so more some less. The samples should be fresh ie taken within the last year otherwise more damage could have arisen. Never never let so called experts cut or drill the cladding. If they insist get the insurer to cover the building with a leak indemnity content before they start so if it leaks in the future you are covered. After all its holes in the cladding that cause leaks. Councils often require full reclads after these holes are made. Another useful test is strength testing to establish if the framing wood is suitable for the home. One major wood supplier has been found guilty of supplying under strength timber to homes. This can result in early decay (extra sugar for fungi as wood is sapwood) and extensive cracking of claddings and sealants leading to unexpected leaks.
- Monitoring of moisture over time: Never be fooled by point in time moisture checks. No single moisture reading event is reliable – and certainly not if you are to spend your money. What we discover is summer investigations find less than 10% of winter leaks – its obvious – why would it leak in summer when its not raining. Unless the target is too good to be true (which it probably is) it’s a sucker’s deal to buy on thermal or scan results or point in time assessments. Always ask for the past 2-3 years of monitoring results – including summer and winter. It’s normally the variances that are of interest. Think of this as if you were buying a car – would you pay money if it had no dash board full of gauges. If the owner has chosen not to install monitoring it is for a very good reason – they have their head in the sand – you don’t. The simplest way to monitor is to read the permanent Mdu PROBES twice yearly. Owners who look after their buildings value will be installing monitoring – so they are available.
- Maintenance plan: This is basic sense. What you want is evidence they have conducted maintenance. This starts with a maintenance plan. If they don’t have one then the chances are they haven’t a clue on what there responsibilities are to look after the home – ie is it treated, does it have decay and what are the moisture contents. A useful maintenance plan has monitoring as its cornerstone with response actions in place should leaks occur – coupled with visual condition assessments of building products – this can be done by pre-purchase inspections – but again should be at the owners cost – why should you do their maintenance? If you are considering purchasing an apartment or unit you should request full disclosure from the bodies corporate of the maintenance plan and monitoring results. Also ask if any of the buildings have had leaks or if investigations have been carried out. Be very wary if nothing is available – it shows denial and head in the sand approach.
- Who pays to get this information? If your negotiations get bogged down and you still want to proceed I find a useful thing to do is agree with the seller before any costs are undertaken that if the tests above all come up positive you will pay but if not they will pay. That puts the onus on them to think it through. They will already be thinking – you may get a pre-purchase inspector who isn’t that good and uses point in time assessment technologies so will likely miss discovering what they fear is happening hidden behind the walls. Not every expert is trained in this and don’t have the expertise in weathertightness training – and many who claim they do want to cut holes or remove the cladding first – or apply limitations on there reports yet still charge tens of thousands.
- What is on the council file? The home may already have been repaired – or it may be listed as a damaged home or a claim under WHRS been initiated. Always seek the council property file.
- Ask the seller to disclose the history of the home. This is the representations that you are entitled to rely on. If the owner says things like ‘never leaked whilst we owned it’ then write that down as that information is useful if you do discover the building is actually a leaker after you purchase it.
- Buying at auctions is fraught with problems – you may have no recourse against the seller or the agent – and it is unlikely the seller wants disclosure of anything about their property. This is where you should think ‘buyer beware’ before you buy.
How to Fix a Leaky Building?
Fixing a leaker has become an expensive matter – mainly because the remediation industry is trying to limit there risk into the future. It’s uncertain how well leakers can be dealt with – follow the tests above – what to look for after the repairs. For example if the repair method doesn’t provide for ‘highly’ treated timber it will continue decaying. Without monitoring how can we be sure it’s been fixed – and who says so – would we trust that person or would we want some physical proof like ongoing moisture contents. All buildings leak so it’s no surprise that repaired buildings will again leak. This is one reason that repaired buildings carry the stigma even after money has been spent attempting to fix it. So the things that are important in repairing leakers are:
- Discover: Getting adequate information before you make decisions and start spending. I see too many owners agree to large capital spends after getting a WHRS report or assessments based on single point in time assessments. If your money is that easy to come by then go ahead – but investigation techniques have moved on from these old style approaches. If your building has been cut apart by one of these people we will assist you recovering costs fixing the damage they have caused. A good value assessment will include the 3 steps above – checking the treatment level, taking numerous samples (non-destructively) to examine for decay and monitoring the moisture over time. We call this the ‘discovery’ phase. Spending time on this saves money and avoids over spending. A useful thought is its better to take 100 small 1% steps than try for the single 100% improvement.
- Making a plan: By slowing the decision making down and getting the discovery phase done a professional plan with options to satisfy owners objectives can be developed to address the requirements of the Building Act (which is that occupants shall be protected from harm and the home shall be healthy) and your plans for the property. You do not have to fix leaks or remove decayed framing unless the occupant’s health and safety are under threat. What is best is to build a ‘long term maintenance plan’- we call this the ‘building lifecycle plan’ so today’s decisions can be reviewed ongoing. Where damage is minor ‘tags’ are placed on timber for future removal, or cladding improvements may be required for drying (which may involve recladding a wall – but not all walls by default) and to lessen future spend changes in design may be useful – like removing complex details that are expensive to keep in good condition.
- Involving the Council: It is always useful to involve council, so you would show them this plan. After all they have become the insurer of the defunct builder in what is called the last man standing rule. Another important aspect is it is in your interests to have that plan on council files as it becomes your disclosure document if you decide to sell in the future. Council often over step the mark and want extra things like – maybe a full reclad. If you are in time (within 10 years of build and have lodged a claim and are eligible) it’s advisable to take 2 options along. One for what is termed targeted repairs and the other a reclad. If council intimate they would not accept targeted repairs then get that in writing with councils reasons – this is useful later in the claim process. If you are being forced into spending along one option path and council has chosen to blatantly ignore reasonable consideration and process adjudicators may well award greater compensation especially for stress.
- Manager: Get an outside manager not the contractor to manage the plan. Once the plan is consented always seek an independent onsite manager to avoid the trappings of the ‘variations clauses’ that inevitably result in escalating costs. You also need an independent weathertightness expert to manage council inspections.
So what does a good plan look like? There are two types of plans emerging. Plan 1 is if you have a claim you rebuild the whole house out of the respondent’s pocket. With the new Government package we are unsure of how long this will last – and respondents are starting to wake up to this. Plan 2 is the minimum spend possible to avoid over capitalization. Most plans fall in the middle ground. Its really up to you – it’s your money. For investors the sensible plan is building the maintenance plan to its extreme so all repairs are fully tax deductible. Where not then it’s a matter of funds available. At a minimum all the building needs is for the occupants to be safe and healthy. Don’t forget that fact. Everything other than that is discretionary spending. For example a new kitchen may be more important than some minor decay in the garage that is not threatening life or limb. This is where the RotStop injection system is useful as it stops rot from getting worse. This allows you time to create an affordable and appropriate plan that you and your partner can live with.
Ian Holyoake
Managing Director – Step Up Group
I would advise all clients and readers of my blog that have leaky buildings to consider their options and to talk to experts like the Step Up Group. They are available on www.stepupgroup.co.nz and 0800 STEP UP.