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Homeowners affected by Celtic Tiger defects face 'frightening' legal threats over repair bills

Repairing fire safety defects can cost up to €20,000 and some homeowners also have to pay to fix leaks and damp issues.

OWNERS OF APARTMENTS with leaks, damp issues and fire safety defects have said they have been ‘aggressively’ pursued for costs to repair fire safety and water ingress issues.

Tens of thousands of apartment units built during the Celtic Tiger era are estimated to be affected by construction defects, largely relating to fire safety deficiencies such as a lack of fire stopping between apartments, or water ingress causing leaks and damp.

Some experts in the area say the real number could be in excess of 100,000; it could take years before the final number to come to light.

Typical costs for each homeowner are usually set at between €15,000 and €20,000 and some developments are affected by both issues, which can double the repair bill.

Campaigners pushing the government to take action to help those impacted have said contract law and statutes of limitation severely restrict the ability of buyers to pursue developers once issues become apparent so the entire financial burden falls on those who own the properties.

One homeowner, Michael, who owns an apartment in a north Dublin complex, told The Journal he was served with legal papers just last week, informing him he had ten days to pay €8,000 for remedial works to address water ingress issues.

The serving of legal papers followed months of correspondence, seen by The Journal, between Michael and the owner management company to reach a repayment arrangement as he said he cannot afford to pay the full amount up front. All property owners in these kinds of developments are members of owner management companies,  have a board of directors and vote on issues such as the management of these kinds of works. 

Michael said the defects have caused leaks in the roofing of the apartment blocks, damp issues with the exterior plaster and water retention in balconies which he said have caused “chunks of the fascias to fall off”.

He received a detailed report on the works needed and the estimated costs early last year and soon after informed the owner management company he did not have the almost €8,000 required, but wanted to work out a regular repayment plan.

“I wasn’t neglecting the fact that the work needed to be done, I know it needs to be and I don’t know who else is going to pay it so I thought so long as they were open to a payment plan it would be fine,” he said.

After his first two offers he said he received his first legal letter in May 2021.

“I think we were still in lockdown, I remember being so stressed out, I just think the way it was handled and the lack of communication from the management company, the fact that there was no delicacy about it, it was all very heavy-handed,” he said.

“It felt quite threatening, I got back in touch and increased my offer but there’s a limit to what I can pay with the mortgage and management fees as well.”

He arranged to borrow money from family to increase his offer to  €620 a month over 12 months.

“I didn’t hear about about that either until I got these papers, there was a knock on the door and they asked if that was my name and handed it over,” he said.

“It says unless I pay in ten days I’ll be summonsed to court – that’s terrifying, so I was really concerned, I don’t have that lump sum and I couldn’t see where I’d get the money from.”

When he called the owner management company’s solicitor to ask what an acceptable arrangement would look like he said he was told if he paid €1,000 up front and then €300 per month after that, it would be accepted by the owner management company.

“I had offered more than €600 per month when I arranged help from my brother – and they never said if I make a €1,000 up front payment they’d accept the monthly offers,” he said. “I could have done that months ago and had so much of it paid off by now.

“There was no understanding that all of this started during the January 2021 lockdown, it was all so abrupt and impersonal and aggressive during what was a scary time for everyone anyway.”

Another homeowner in a different complex said he had a similar experience after he informed his owner management company that he would have trouble paying for fire safety defect repairs.

In his case the developer contributed €490,000 towards the more than €1.3 million total bill for the repairs. The cost for his one-bed apartment is just under €16,000.

“They wanted it all in one go, but they also said they would accept it in instalments once everything was paid by the time the works were completed  – five to six months,” he said.

He was first notified of the defects in February 2020 and as a hospitality worker he was unemployed for a significant period of time after that due to Covid-19 restrictions so he was unable to pay the requested amount.

“There was an initial letter threatening legal action including securing a judgement against me for the sum owed and initiating bankruptcy proceedings against me, it was crazy stuff altogether,” he said. 

“It caused me massive stress, having a bill like that hanging over me and I had barely earned anything more than minimum wage for two years previous.”

He did manage to come to an arrangement with the owner management company and used his savings to pay an up-front cost of €7,000, with an agreement to pay smaller monthly installments until the entire bill is paid off. 

Building regulations

The Construction Defect Alliance, the campaign group for impacted homeowners, has around 30,000 affected properties on its database but estimates that as many as 120,000 properties may have one or more of these types of structural deficits.

Speaking to The Journal, spokesperson Pat Montague said owner-occupiers are “the ones who are most squeezed” when it comes to affording these bills of sometimes tens of thousand of euro.

“People are already paying service charges, they’re hit by the cost of living, they’re paying mortgages and then this comes in, they just don’t have ready cash. And the problem is, if you go to a bank you’re paying interest rates on top of that.”

He acknowledged the frustration of homeowners who argue that these costs should not be their responsibility as they had surveyors look at their apartments before they bought and fire certs were in place. Building regulations at the time these homes were built were only required an inspection to be done after the units were completed.

This was a visual inspection, to be done by an architect or an engineer, for example, who was working on the project. There was also a requirement for 15% of these projects to be inspected by building control staff from local authorities.

Montague said many of the defects that are now causing issues could not be spotted through a basic visual inspection after the buildings were finished as the walls – which should contain fire stopping – were closed up and water ingress issues like leaks and mould take time to appear.

He said owner management companies, of which all owners are members, were left in a difficult position as they have a legal duty to address any issues that are a threat to the health and safety of those living in a development.

“There are pressures on them to do something and the problem is the only real route they have to fund these works is through a levy on the members. In reality there is no effective legal route to get at the builder developers,” he explained.

If you want to sue them under tort, which is basically negligence or contract, there’s a six year statute of limitations, so they’re effectively statute barred from suing in civil law in that way [once issues become apparent]. The other thing is that all of the builder developers set up what are called special purpose vehicle companies for each development, which basically insulates their assets from being got at if somebody wants to sue them.

He said the owners of one development were told that there was about a 25% chance of success if they pursued legal action, it would cost a minimum of €250,000 to fund this action and even if they were successful “the chances of getting money were virtually nil”.

“The builders and developers set up their companies deliberately to protect themselves from legal action and company law facilitates them to do it,” he said.

Montague said the legal obligations of the owner management companies to fix these defects as well as the genuine concerns about the safety of residents, “is pitting neighbours against neighbours” when some owners cannot afford to pay or refuse because they do not believe it should be their responsibility.

“It’s absolutely horrendous, the stresses and strains for people because of being aware it is not safe from a fire safety point of view or is unhealthy with damp and then it does cause rows between people at general meetings if people are being pursued legally to recover the levies. It’s absolutely awful. It leads to huge neighbours disputes.”

The Department of Housing has established an independent working group to examine fire safety and structural safety defects in apartments and duplexes built between 1991 and 2013. 

The Construction Defects Alliance has suggested a number of solutions to this working group, including a grant scheme, tax relief and access to low cost loans.

This group, which has been meeting monthly since March last year, will report back to the Minister for Housing Darragh O’Brien on the scale of the problem as well as the costs associated with repairs later this year.  

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