Can the developer that built my flat avoid a cladding repair bill now its company has been sold?
- Claims against a developer depend on age of the building with cladding issues
- If you bought new you may have a new build warranty that may cover cladding
I live in a block with cladding issues and I’m unable to sell while the repair costs are being discussed.
In the meantime, the developer responsible for building our block of flats has been sold.
Does this mean that that it can no longer be held responsible for the building defects and the repair costs?
Since the Grenfell Tower fire in 2017, concerns about cladding have become a national issue
MailOnline Property expert Myra Butterworth said: It must be deeply concerning that the developer of your block of flats has been sold, while you are still in this position.
It raises the question as to whether you can still hold it liable for any of the cladding issues.
It is yet another issue for you to be dealing with in your fight to resolve the cladding issues and get the massive cost of repairs covered.
While all these issues are being addressed, you are left with a potentially unsafe flat that you are unable to sell as lenders are unwilling to lend on it.
We have outlined some of potential legal avenues below. It is also worth following up with NHBC and any collateral warranty – if there is any – to help cover the costs.
It is understood that in the past three years, NHBC has accepted 23 major claims on high rise developments that relate to cladding or fire-safety issues, with a total estimated cost of more than £130million.
Liam Spender, of law firm Velitor Law, said: Whether there is any worthwhile claim against the developer depends on the age of the building, whether you bought off-plan and how any sale of the developer is being structured.
If your building was finished less than six years ago, you may have a claim against the developer under the Defective Premises Act 1972.
If you bought your flat off-plan less than six years ago, you may also have a claim for breach of contract against the developer.
If your building is more than six years old, it is unfortunately unlikely that you will be able to pursue any contractual claim or Defective Premises Act claim against the developer due to the strict six-year time limits for making such claims.
A negligence claim is unlikely to be worth pursuing because, as the law currently stands, the costs of replacing cladding are deemed pure economic loss (loss measured only in money) and therefore not recoverable from the developer.
If the claims are within time and assuming the developer is a company, you should still be able to proceed with these claims even with the developer’s change of ownership. The time limits for making a claim will still apply.
Whether the claims are still worth pursuing depends on whether the developer company itself was sold or whether it was only a sale of the assets of the developer.
If it was an asset-only sale, there may be no developer company left, or no assets left, able to pay any successful claim.
If the developer company itself was sold then the new owner may be standing behind that company and it may still be able to pay any successful claim. Any insurance the developer holds may still be a source that could be used to pay a successful claim, regardless of the sale.
Sometimes the building owner obtains something called a collateral warranty from the developer. This may permit the building owner to claim against other parties involved in construction, for example architects and engineers. The sale of the developer should not have any effect on the collateral warranty, subject to there being assets in, or insurance covering, the parties subject to the collateral warranty to be able to pay any successful claim.
If you bought new you may also have the benefit of a new build warranty, which may cover cladding. These warranties typically last 10 years from the date the building was completed. Claims under the warranty should still be available regardless of any change of ownership of the developer. The benefit of this warranty should also pass to any buyer of your flat.
Finally, if your building is more than 18 metres tall, there is some limited Government support available to pay for the costs of removing cladding. The managing agent or owner of the property should have already applied for this funding, if available.
A spokesman for NHBC added: Claims received for properties covered by an NHBC policy are considered on an individual basis under our Buildmark warranty. If a policy holder has anything they wish to discuss, we would be pleased to hear from them.