When condo defects emerge years later, who pays?
Disputes can turn into a blame game or the developers may no longer exist.
When building defects emerge years later, determining liability and responsibility can be a complicated process. Disputes often arise between the condominium developer, architect, engineers, contractors and subcontractors. In some cases, developers create separate companies for each project and dissolve them shortly after completion, leaving the condominium’s management corporation (MCST) without a party to sue, potentially leaving them responsible for the repair costs.
Two recent lawsuits illustrate the complexity of these disputes. At Foresque Residences, a cement-based patch detached from a balcony, falling about 20 metres, about 10 years after the development in Petir Road was completed. The developer, Wincheer, argued the claims were brought too late, while their main contractor is currently undergoing creditors’ voluntary winding-up.
At Canberra Residences, problems were reported in 2013 but a settlement was reached in 2020 to rectify the issues. However, the MCST is now back in court, alleging some problems remain unresolved. The main contractor, MCC Engineering, disputes this, claiming the issues include water seepage, ponding at lift lobbies, defective paintwork and shattered balcony glass panels. In both cases, the cause of the defects and the responsible party are being contested.
When the companies involved in construction no longer exist, the situation becomes even more complicated. At Waterwoods executive condominium in Punggol, defects such as water seepage and cracks in external walls were discovered from around 2019. The original developer, Coral Edge Development, was dissolved in 2020 after becoming insolvent, and its main contractor, Greatearth Corporation, was also insolvent in 2021.
The MCST applied to the High Court to have the developer’s dissolution declared void, seeking to recover about $3.9 million for rectification works. However, the court dismissed the application, stating that it was "pointless" to restore the developer as it no longer had assets to meet the MCST’s claim.
These cases highlight the challenges faced by homeowners when defects emerge late or disputes drag on for years. Legal time limits under the Limitation Act become increasingly important after the one-year defects liability period, which starts when buyers take possession of their homes. Homeowners may have to bear the costs or pursue claims with sub-contractors responsible for the defects.
The first line of protection is the one-year defects liability period, after which legal time limits and the risk of a company being wound up can complicate recovery. Homeowners are advised to document and investigate issues as early as possible to avoid potential complications.
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