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Fault lines: A look at defect resolution in condos

What counts as a defect in a condo, who is liable and what can homeowners do to resolve issues?

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FAULT LINES: What counts as a defect in a condo, who is liable and what can homeowners do to resolve issues?

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FAULT LINES: What counts as a defect in a condo, who is liable and what can homeowners do to resolve issues?

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Some of the flaws uncovered in new homes by defects inspection services: a washing machine drainage pipe with missing cap (above left), and part of a wall left unfinished (above right).

CRACKS and leaks, rotting timber, foul smells, flooding in public areas - these are a few of the reported defects that have surfaced at private condos over the decades. With the allegations come accusations, which inevitably put developers, main contractors and homeowners at loggerheads. Most recently, authorities blocked Chinese developer Kingsford Huray Development from selling its Normanton Park project until all units get Quality Mark (QM) stamps from authorities and the development gets its Temporary Occupation (TOP) Permit. This came after angry residents reportedly took the developer to task over bad construction work at a past project, Kingsford Hillview Peak.

Other alleged defect issues previously reported in the media include flooded staircases and rotting timber pool decks at Sentosa's The Coast; a leaking basement car park at Emery Point in Tanjong Katong, and cracks in the plaster at Seasons Park in Yio Chu Kang Road.

In 2018, the Building and Construction Authority (BCA) - the body that addresses complaints concerning structural safety of buildings - received 170 reports of "feedback on quality and defects from homeowners", BCA says. It did not give data for previous years.

Experts like Chin Cheong say they have not witnessed a significant rise or fall in defects. But Mr Chin adds that in recent years he has been hired by some developers seeking to document the state of their condos before they hand over management to the Management Corporation Strata Title (MCST). Mr Chin is managing director of surveying firm Building Appraisal.

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He handles 13 to 14 condominium cases a year for developers, contractors, MCST and owners, and observes that during property downturns, more people approach him for to look into supposed defects. When the market is good, "people are not concerned with defects. They'll just flip it and sell it and move on," he notes.

So-called defects inspection firms have also sprouted up. Homebuyers pay them to inspect newly bought units at handover before moving in, or to study a resale property before purchase. Industry observers estimate there are now over 10 such companies operating in Singapore. One such firm, Absolute Inspection, which started up in 2015, says it did 3,000 inspections that year; and 4,000 in 2018.

What - and who - makes it a defect?

According to Mr Chin, a defect occurs when something is built not in accordance to specification and codes of practice, or is not built to be "fit for its purpose".

These defects can affect safety, functionality and performance, and aesthetics. Experts say defects can be attributed to many reasons, including an architect's insistence on a certain material or design to lack of skill by workers or rush jobs, and accountability and liability can be hard to pinpoint.

So when homeowners discover defects, their best hope is that the problem can be easily resolved.

In Singapore, developers are responsible for any defect that occurs in the units, the project and common property for typically 12 months - what's known as the Defects Liability Period (DLP).

Within that period, the homebuyer can report defects due to defective workmanship or materials not in line with what was promised in the sale and purchase agreement; and have it made good by the developer at its own cost.

But while most developers and contractors will step up to resolve issues, complications can get in the way.

Davin Soh, director of defects inspection firm Defects Checks, says: "Certain defects rectification require a lot of works (usually major hacking) and may cause more damage to surroundings than solve the initial defect."

Some experts also say homeowners raise issues which are not defined as defects. About 10 to 15 per cent of complaints Mr Chin gets are due to what he sees as unrealistic expectations, rather than genuine defects. As Andy Lim, managing director of property management firm Ocean IFM, points out, some homeowners complain about "even a fine scratch on the marble floor".

Another example from Mr Chin from Building Appraisal is a complaint that marble tiles are not as durable as expected, overlooking that the developer has, per agreement, provided for reconstituted or compressed marble rather than natural stone.

Within the one-year DLP,the Singapore Contractors Association Ltd's (SCAL) immediate past president Kenneth Loo says, it is important for contractors and developers to be responsive to homeowners to manage their expectations and educate them.

The rocky road to resolution

One option that has risen in popularity for homeowners here is hiring a defects inspection firm. Absolute Inspection's founder Tan Wee Kwang believes hiring his firm can help make the process smoother.

He explains: "Our objective is to protect their interests by identifying the defects and facilitating the joint inspection with the developer and main contractor, the subsequent defects rectification by the contractor and the handover inspection by the developer and contractor."

But some advise caution with this approach, suggesting that since the industry is unregulated, the barrier to entry to keep out players that are unscrupulous or lacking in expertise is low.

Absolute Inspection's Mr Tan and Defects Checks' Mr Soh point to their track records: Mr Tan was previously a BCA officer and also worked at a local contractor; Mr Soh used to be a property manager with a local developer.

Identifying an issue as a defect is the first step but not all defects can be resolved at handover or within the DLP.

Some, called latent defects, take a while to surface, typically after a period of use. Defects may also persist if they were not rectified properly during the one-year period.

Daniel Tay, a partner with law firm Chan Neo says: "More serious defects that remain could range from wrong material or equipment selected or even serious workmanship issues where the defects are only detected with time and use where deterioration occurs faster than the expected life span. For instance, falling structures or water leakages after storms or prolonged rain spells, de-bonded tiling, rotting/discoloured timber or even under-powered air-cons or water pump systems."

After the DLP, buyers have a right to sue for latent defects up to three years after defects could reasonably been detected, or a general right of up to six years to sue in contract, Mr Tay says. But he says it is not always clear when such rights start or end.

It is also not easy for an owner or the condo MCST to ascertain the root cause of a defect at the outset. This in turn leads to difficulties in identifying the appropriate party to commence action against, be it the developer, architect, main contractor or other subcontractors, according to WongPartnership lawyer Christopher Chuah.

Moreover, beyond the one-year period, the developer sometimes can claim the issues in the condo are due to wear and tear or maintenance problems, Steven Ong, a building surveyor at Arris Building Consultants says.

To verify whether a defect is genuine, whose fault it is, and determine how to fix it, developers and homeowners alike engage building surveyors the likes of Mr Ong and Mr Chin.

Pursuing a case all the way can be expensive. Bringing a defects case to court can take up to three to four years to conclude, and legal costs can amount to S$400,000 to S$500,000 excluding expert costs and other disbursements, based on Mr Chuah's experience. That is, if it makes it there. Mr Tay says some factors influencing how far proceedings go include the number of owners affected and willingness to sue, and the number, extent and cost of rectifying the defects.

To be fair, genuine issues may not always be the developer's fault. Out of the cases with genuine problems that Mr Chin comes across - typically a few years after handover - around 10 to 25 per cent affect safety and functionality or do not adhere to codes of practice, while of the remainder, half of these are aesthetic issues, which do not affect the enjoyment or use of the property as much, and the other half is due to failure of maintenance and fair wear and tear.

Outcomes

Court precedent is not encouraging for homeowners who want to pursue legal action all the way.

In a judgment in 2016 by the court for a dispute at Seaview condominium, it was ruled that the developer, architect and main contractor could rely on an "independent contractor defence" against liability - meaning that they are not vicariously liable for the negligence of an independent contractor as long as they had exercised reasonable care in appointing them.

The court further clarified that there was no civil right of action for an MCST or subsidiary proprietors under the Building Maintenance and Strata Management Act against developers.

Mr Tay of Chan Neo says: "The implications are that homeowners may have to first identify and then sue smaller parties for the rectification cost, the difficulty being that they may not eventually be good for the money even if owners can prove their case in court."

To Mr Chuah, this means that the appropriate avenue against a developer, regarding defects, would be in contract under the sale and purchase agreement rather than suing for negligence.

Anecdotal evidence suggests that many homeowners end up settling the matter privately, often with mediation.

The Singapore Mediation Centre (SMC) tells The Business Times mediation can create settlement outcomes that are more "creative" than simply ascribing damages or going to court.

In one example, SMC says parties in the dispute agreed to draw lots to decide which independent inspector to pick to oversee some rectification works; this was after they previously could not agree about what satisfactory rectification would look like.

Going back to root causes

For developers and contractors alike, poor quality can result in reputational damage. SCAL's Mr Loo says: "No contractors in their right mind would want to do a bad job in this business, unless you say that you want to close shop tomorrow." Moreover, it is often more costly for contractors to rectify a defect than to do it right the first time, he adds.

How can the incidence of defects be further reduced?

Mr Tan of Absolute Inspection puts it this way: "In the construction of a building, time, cost and quality are usually the key elements which need to be controlled carefully and balanced such that the building is of an acceptable quality and can be completed within the committed time frame and budget."

Therefore, focusing on lower cost or simply to stay within project budget and a faster completion time usually means a compromise on the workmanship quality of a project. How developers and contractors manage this trifecta seems to vary.

One contractor tells BT that some developers simply want it cheap and "do not mind sacrificing for a job that is not so good".

On the other hand, other developers may be more cognisant of quality. Chief executive of Edmund Tie & Company Ong Choon Fah says that there are some developers here who document past mistakes and learn from them, and are aware about how quality can add to their brand. "They do not just want to sell this (development), they are building a relationship," she says.

For example, some developers have their own representatives, project management teams and consultants on-site to ensure quality standards are kept up throughout the building process, Low Sui Pheng, a professor at the Department of Building at the School of Design and Environment at the National University of Singapore (NUS) says.

But others suggest that the health of the construction industry may be a factor.

Chan Neo's Mr Tay says: "Construction in past years has been a poorly performing sector, hit hard by a high rate of delayed bill payments. With cash flow as the lifeblood of the industry, this possibly affects local SMEs most where payment could be made partially or payments are delayed 90 days or more."

He has heard of smaller contractors saying they may have to tender at or below cost especially for those lower-tier contracts because there seems to be more competition for tenders.

As one local contractor adds: "It's a chain effect. You get a lousy price, unless you say you are willing to lose money to keep your reputation... But how many contractors will think like that? I don't think so... Like it or not, the job will suffer."

And the result is cutting down on labour, cheaper materials, or cheaper subcontractors who also cut corners, he says.

Others point to the need for better processes in the labour-intensive industry. Says Arris' Mr Ong: "Typically, what happens is that you either have tradesmen who are not skilled, or things were done in a rush to meet a deadline. And things were not checked by somebody of a higher expertise."

Others point out that Singapore needs more skilled tradesmen, in order to deliver better finishing in carpentry, for instance.

SCAL's Mr Loo says more can be done to get more experienced foreign tradesmen to stay in Singapore for longer, including lower levies, to improve the level of skills in the workforce here.

According to Prof Low, there is an attitude of "not my problem" in the building industry that needs to change. He points to a 2015 Forum letter to The Straits Times, where the writer claimed marble tiles that were installed in her condo bathroom could lead to falls.

He says: "From drawing to building, I'm sure along the way many people must have seen it. But how come no one raised this issue? This care and attitude is something we need to cultivate. "

Solutions

For the construction industry, one solution may well be off-site building methods like pre-fabricated construction technology (PPVC), some experts suggest, because it allows building to happen in a controlled environment.

Newly-completed condo Clement Canopy is now the world's tallest concrete development built by PPVC technology. Pierre-Eric Saint André, chief executive for Asia-Pacific Bouygues Batiment International, whose subsidiary Dragages Singapore built the development, says: "You are one level on the ground and you can see everything, once you have a defect, you can correct it." But he notes that "currently modular building is not cheaper than conventional building, but the objective is to make it cheaper."

For homeowners, experts suggest acting as early as possible the moment they see a defect. One reason is that waiting makes it harder for a professional like Mr Chin to pinpoint the causes. "If you're coming after four or five years," he explains, "it's like a post-mortem exercise, where you're trying to form all the jigsaw puzzles, and put it in a piece all together with whatever information, or no information at all."


Quality control measures in place

WHILE conflict can arise over definitions of property defects and liability, the Building and Construction Authority (BCA) has in place two schemes promote good workmanship before keys land in the hands of homeowners.

Under the Construction Quality Assessment System (Conquas) programme, BCA officers assess the structural, mechanical and engineering, and architectural works, and assign a score out of 100 based on the percentage of items checked that met standards.

A separate and voluntary scheme, Quality Mark (QM), assesses architectural finishes.

A Conquas assessment is mandatory for public-sector building projects and new buildings constructed on Government Land Sales (GLS) sites. In the past three years, 95 per cent of private residential and commercial developments have adopted Conquas, says a BCA spokesperson.

And Conquas scores appear to have improved over time, going by publicly available statistics. In 2018, about half of all the 177 projects rated had a score of 90.1 and higher. In 2011, just 29 per cent of the 139 rated achieved those scores.

But Conquas has its limitations. Based on a sampling method, it tests on average one in four units and only studies workmanship, without looking at design and material issues.

QM assesses every single unit in the condo - albeit only for internal architectural finishes. Take-up rate for the QM test was 52 per cent by number of dwelling units over the last three years, according to the BCA.

Based on a 2017 survey of homeowners conducted by an independent consultant, QM properties had 50 per cent less defects compared to properties that did not undergo QM or Conquas checks, said BCA.

One study points to a strong relation between construction quality and the selling price and appreciation rate of new homes.

A 2014 paper by the National University of Singapore (NUS)found that a one standard deviation improvement in the Conquas score raised the selling price of an average home by 2.92 per cent. The NUS study looked at 100,593 apartment unit transactions in 205 developments completed between 1998 and 2010.