Leaky building owners opt for government scheme over litigation

Owners of a 93 unit apartment complex in Auckland are about to endure a second round of leaky building repairs, at an estimated cost of $18 million. Remedial work was carried out at Summerfield Vilas in Ponsonby between 2002-2004. However, the complex now requires further and extensive repairs, including a full reroof and reclad.

The owners have decided against litigating this matter. Instead, they have applied for the government’s Financial Assistance Package (‘FAP’). If this application is successful, the FAP could provide the owners of the complex with up to $9 million to assist with repair costs.

Under the FAP, which was created in 2011, the government and relevant council (provided it is a participant in the FAP) each pay 25% of the total repair costs, with the home owner paying the remaining 50%.  The catch is that if the home owner accepts the FAP, they cannot sue the council or the government.  However, the home owner retains the right to sue any other liable parties, such as builders, developers, architects and manufacturers of defective products.

The primary advantage of the FAP system is that it offers homeowners the certainty of a guaranteed financial contribution without the stress of litigation. Further, the FAP can be more cost effective and efficient than pursuing a claim through the Weathertight Homes Tribunal.

A significant drawback with the FAP system is that it only compensates for 50% of repair costs, and owners are left to front up with the remaining 50% (or sue the builder etc).  Further, the FAP only covers repair costs and costs that directly related to the repair.  Owners cannot claim for the same remedies that they could in litigation, such as diminution of value, general damages (including stress) or consequential losses (including relocation costs and alternative accommodation costs).

More information about the FAP can be found here:

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