Don't rely on a seller's building report: Family facing a $43,000 bill for a new roof

Palmerston North first home buyers Trang and Kelvin Thomas discover their new home has, contrary to a real estate agent report, a leaking roof and will cost at least $45,000 to repair.

The seller-supplied building report noted some dents in the roof could make water pool, and some of the cladding to roof junctions are reliant on paint to remain waterproof.

​Kelvin Thomas​ and Trang Dong​ say they relied on a seller’s building report when they bought their first home​, and now face a $43,000​ bill for a new roof after leaks appeared months after settling.
The couple, who settled on their Palmerston North home in August 2021​, say they noticed the first leak about three months after settling.

The leak in the garage was minor, and Thomas said the family didn’t take any action against the previous owners or real estate agents because they thought it would be an easy fix.
Then in February last year, heavy rains resulted in water started dripping inside the house, he said.

Kelvin said the leaks began in his daughter Emma’s bedroom, and then in the living room, and the family had to leave buckets out.

“My daughter's room is leaking everywhere, she can’t sleep she’s so scared,” Dong said. “We had to move her into our bedroom.”
The couple paid a handyman $900 to do remedial work when they noticed the leak in the garage, but the leaking got worse, and they paid $1300 more for repairs in March.
Issues continued, and in July, the couple paid for a roofer to do an inspection.

The report, by Streamline Roofing, found that the roof was in “extremely poor condition and requires a full roof replacement”.

There was a significant amount of rust over the entire roof and the internal gutter, which was most likely to be leaking on to the ceiling, the report said.
“Many of the nail holes are rusted, as well as missing washers, or not having the washers properly in place.”

The roofer also pointed to poor workmanship in other areas of the roof, and tape that had been applied over rusted areas and holes, which would not keep water from leaking through.
“At the back of the house, new iron has been installed however the iron has been cut too short, allowing water to fall behind the spouting and possibly into the wall cavity,” the report said.

The family’s neighbour, Malcolm Frith​, who was also a builder said he inspected the roof, and it was obvious it was in poor condition.
“It was pretty obvious there was something wrong,” he said.

The seller-supplied building inspection, completed by Total Home Inspection Services in April 2021​, describing the roof’s condition as: “Currently performing, but maintenance is needed.”
The report noted remedial work, before a full prep and paint, was a recommended long term improvement, and also recommended “discussing maintenance options with an experienced roofer”.
The report stated the corrugated iron roof is “generally well sealed” but isolated repairs would be required to flashings, fixings, areas of iron, and the cap flashings before a full prep and paint.

It also noted some fixing nails needed replacing, and a large internal gutter running through the centre of the house showed “varying amounts of corrosion”.
“There is no evidence within the house that this is currently failing, but it needs to be checked further and most likely will need to be replaced,” the building inspection report said.

The report included a photo of a section of roof that appeared to be black tarpaulin held down by two large blocks of wood, but was not mentioned in the report.
The report mentioned tape repairs in places, and recommended they be removed to check if long-term repair was required.

Dong said that during a mediation session between the real estate agency and building inspector, the inspector said he would help make the house watertight, but he then said he would only fix the too-short areas of roof. The building inspector declined to comment.
Legal recourse for the family is limited against the inspector, because the report was in the previous owner’s name, and no legal relationship exists between the inspector and the family.

Dong said she was shocked that the inspector could have missed so much, and she did not believe the law would allow a buyer to purchase a leaky home.

The pair said they were advised by the real estate agents who handled the sale that they did not need to have their own property inspection done because the seller was able to provide a report.
“What I’ve done wrong is I fully trusted them,” Dong says. “I thought everybody is nice and trustworthy.”

The sale was handled by real estate agency Property Brokers, with agent Alex Ward and manager David Kleu named on the sale and purchase agreement.
When asked whether the agents advised the customers they did not need to have their own inspection done, Kleu said Ward had left the agency, and no further comment would be given, as they had been advised the family were pursuing legal action.

The previous owners, who are named in the sale and purchase agreement as Paul Dando and Dorothy Carse, were contacted via their lawyer Michael Cochrane, with questions over whether the home was known to leak at the time of sale.

Cochrane said the sellers had declined to comment, and he would be making no statement.
There may be other avenues for the family to pursue damages.

Joanna Pidgeon, a partner at Pidgeon Law in Auckland, looked over the family’s sale agreement, and lacked any clauses that might be used by the sellers to protect themselves.
Other agreements might have clauses that stated building reports provided by the vendor were for general information and due diligence purposes only, or that the buyer agreed that they bought the property based on their own investigation or inspection of the property.
“The vendor has not given themselves any protection by using such a clause,” Pidgeon said.

​She said the family may have claims against the sellers under the Fair Trading Act, which stated no person should engage in conduct that was misleading or deceptive, or was likely to mislead or deceive, during a trade.

They may also have claims under the Contract and Commercial Law Act, which allowed for damages to be awarded awarded for misrepresentation if a party had been induced to enter into the contract by a misrepresentation, whether innocently or fraudulently.
Pidgeon said the family could take both the sales agents and sellers to the disputes tribunal, which could award damages up to $30,000.
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“By providing the incorrect building report, even if this was done innocently by the vendor, they are liable for the misrepresentation,” Pidgeon said.
Pidgeon said best practice was to adviseclients to get their own building report, or to check, if one was provided, whether there were conditions limiting liability to the producer of the report.
The family’s lawyer, Amanda McKenzie of Innes Dean​, did not respond to requests for comment.

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