The risks associated with buying 'off plan' are illustrated by a recent case in which the owners of more than 100 flats in two blocks in Leeds found themselves facing a series of problems due to defective workmanship.
Financial constraints meant that the contractor who built the apartments skimped in various areas, leaving the flats subject to mould, leaks and condensation problems.
The owners, most of whom bought the flats off plan and without a new homes warranty, sought redress for the problems they suffered.
They faced the obstacle that the developer from whom they had purchased their properties was in administration and unlikely to be able to fund the compensation they were seeking. They had no contract with the company that had carried out the substandard work.
The result was that the flat owners took action by bringing proceedings directly against the contractor under the Defective Premises Act 1972. The Act requires anyone doing work in connection with the provision of a dwelling to ensure that it is completed to a standard which makes the dwelling fit for human habitation.
The High Court was unable to accept that a block of flats constituted a 'dwelling', although the part of the block occupied exclusively by each flat owner could be. Accordingly, any defects relating to the common parts of the buildings had to be excluded, but the contractor could be held liable for defects to the flats themselves.
The case then turned on whether the defects rendered the flats unfit for human habitation. A dwelling is unfit for human habitation if it cannot be occupied for a reasonable time without a risk to the health or safety of the occupants and it cannot be occupied for a reasonable time without undue inconvenience or discomfort to the occupants.
Whether or not this is the case is a matter of fact and the question of what constitutes a 'reasonable time' will depend on the seriousness of the defect. In addition, it is the totality of the effect of the defects which is in point, not the individual defects themselves. Nor do the defects have to be evident at the time of completion of the sale to be actionable.