http://propertysoul.com/2016/02/23/d...loper-defects/
Dealing with developer defects
February 23, 2016
Last year, there are 19,000 new non-landed private residential units completed. 2016 will see another 22,351 units going to obtain their TOP. And the numbers are not even taking into account the TOP of HDB and BTO flats.
When these new home owners collect the key to their flats, do they know how to inspect their units and what defects to look out for? Do they know that there are as many as 400 to 600 defects on average in any new unit?
Below is an abstract from my book No B.S. Guide to Property Investment about developer defects on TOP units.
Fixing, fixing, and more fixing
Once I went for a flat viewing in a condominium near the East Coast.
Towards the end of the session, the property agent showing me around had to excuse himself to the bathroom.
The tenant happened to be home. He rented this flat when the project was brand new. He was not renewing the lease after his one-year stay.
He suddenly came over and talked to me.
“I would definitely buy this place if I were you.”
“Why?”
“Because for the past twelve months, I have helped the owner to fix whatever that needs to be fixed.”
I asked him to show me the major work done. He ended up walking me through the two-bedroom apartment all over again, pointing out countless defects fixed in the halls, bedrooms, bathrooms, kitchen and balcony.
At the end, he sighed, “For all my time spent on arranging these repairs, and for the owner’s money spent on all these out-of-pocket expenses, you don’t know how lucky you are to take over a defect-free property without having to raise a finger!”
There is another similar project, by coincidence, also located in the East Coast area.
Soon after obtaining the TOP (Temporary Occupation Permit) in 2003, a third of the owners complained about leakage of rain water in their apartment. The car park had a shocking 280 points of leakage. The swimming pool was built with dangerous sharp edges.
In spite of the complaints over the years, the developer only pointed fingers at the contractors it engaged in building the project. To rectify the leakage problem, they deployed the cheapest method of using silicone to give it a temporary fix.
I remember I visited the sales gallery during the launch of this project in 2002. The sales brochure stated clearly that the roof comes with “reinforced concrete flat roof with waterproofing and insulation for roof above apartment units”.
Under waterproofing, it reads “shall be provided at bathrooms, W.C., kitchen, yard, planters, balcony, roof terrace, open landscaped deck and driveway at 1st storey, swimming pool and pool deck, changing rooms and r.c. flat roofs”.
Why is the waterproofing quality still far from satisfactory?
When defects are passed to you
If you were one of the unfortunate buyers of these projects, what would you do?
You won’t want to talk to the media for these kind of matters. Who knows whether the value of your property will drop significantly once the story leaks out (that’s much worse than a water leak!).
You don’t want to bring it up in court either. Why waste time and money hiring a lawyer? As an owner, even if you win the case, you won’t get any compensation, except for the court to order the developer to fix the defects.
You can only cross your fingers that the developer takes care of the rectifying work so that you don’t have to dig into your own pocket. After all, it is the developer’s obligation to fix all defects under the liability period of one year after the TOP date.
If that fails, and you can’t wait forever for the developer to fix the leaks, you have to solve the problem yourself so that you can finally rent out the unit. To an investor, time is money.
The disadvantage of buying brand new
When you buy a brand new unit from a developer, you are only one out of hundreds or a thousand owners. To the developer, your bargaining power is low.
When you buy a resale unit from an owner, you are the party buying the unit. To the seller, your bargaining power is high.
If you find any defect (say signs of water seepage) on the ceiling, you can state the matter in the letter of intent to purchase. The owner must rectify the problem before handing over the unit to you. Your lawyer will help you to seek compensation if the seller fails to do so.
Below is a list of past projects with building defects or owner complaints:
To find out more about common defects in TOP units, legal pitfalls of buying private properties and legal procedure in handling defect disputes, join us at the Property Defects Inspection 101 education seminar this Saturday. See you there!
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