There isn’t enough protection for NSW home buyers against building defects.

This is not an opinion — it’s a fact.

Try to look up the recent case of Williams vs Pisano at NSW Court of Appeals. From their story, you will see how house sellers could easily get away from complaints of egregious building defects. If you want the gist of the matter, here it goes:

The vendors Williams and Dandris bought a house in NSW back in 2003. After seven years of living there, they began renovating the house in order to sell it for profit. Later in 2011, they hired a skilful real estate agent to advertise the house for them.

The Pisanos, seeing the catchy ad on the web, quickly contacted the estate agent who glibly marketed the property as ‘built to the highest standard’. The couple ultimately bought the meticulously constructed home for $3.35 million.

But numerous defects began to appear soon after the Pisanos moved in and the cooling period of the contract of sale ended. The rainy weather revealed the horrors that the newly-renovated house was hiding. When water penetrated the house, the Pisanos sought help and justice through NSW Court of Appeals.

At first, the Pisanos seemed to be winning when they used the Australian Consumer Law as a reference. Based on this, the primary judge was convinced that the vendors were guilty of using deceptive description of the property in the web ad, brochure, and oral statements. To correct the defects and damages, the judge concluded that each of the vendors had to pay them the full amount of $1.2 million.

But the defendants appealed, raising three arguments:

• first, Williams denied that they engaged “in trade or commerce”, which means the Australian Consumer Law does not apply to them;
• second, he used the Competition and Consumer Act to point out that the liability should be equally divided between the vendors (Mr. Williams and Ms. Dandris); and
• third, he pointed out that the judge miscalculated the damages because he failed to consider the market price of the house.

After this appeal, the decision of the primary judge was set aside. In short, the defendants won.

What Could Have Been Done Differently?

While brilliant lawyers can argue and appeal for the Pisanos, adequate and comprehensive pre-purchase inspections would have uncovered these material defects and prevented this from happening.

Also, the fact that the house was renovated by the owners, who were not professional builders, should have raised red flags. If only they consulted a professional inspector.

A Takeaway Lesson

The Australian Consumer Law is designed to protect buyers from this bad deal. This story proved that the policies and law in favour of consumers are still very limited. Even the Court of Appeals of NSW cannot uphold the rights of poor property purchasers. What you can rely on are pre-purchase inspections, which some buyers tend to skimp on — if not skip completely.

At the moment, researchers and concerned residents of NSW are asking to revise the outdated law related to building defects. Maybe in a year or two, their inquiry might improve the home buyers’ protection.

While we wait for the necessary changes in NSW home building, buying and selling law, shield yourself from unworthy investments by gathering as much facts to make an informed, remorse free buying decision.

Sources:

• Domain.com.au
• Lexology.com