Note: liability for serious defect in housing

What is a serious defect? How long is a contractor liable for it? What do reassuring words from the contractor mean, and if this reassurance turns out to be wrong, is there still liability 15 years after completion? The Arbitration Council for Construction has issued rulings on all of these issues.

Liability for a serious defect

The vast majority of new construction homes in the Netherlands are sold with a warranty. According to the contract, the builder is liable for defects in the homes both according to the contract and according to the warranty. A serious defect is a defect that compromises the solidity of the house and can only be repaired with costly interventions. The warranty for such a defect expires 10 years after completion. The contract has a 20-year liability. Arbitrators rule that a buyer can choose which liability to use.

Reassuring words

In this case, the contractor had said in 2004 after complaints from the buyers that there was no defect that they needed to worry about. When buyers did report this defect 10 years later and they were concerned, the contractor informed them that he was no longer liable. According to the contractor, the 2004 complaint had triggered a statute of limitations. Arbitrators informed that it is not the case that a statute of limitations begins to run if the contractor falsely reassures buyers. Buyers may then trust that such reassurance is justified.

Terms

According to the contract as well as the warranty regulations and the law, several terms play a role in this case. Arbitrators rule that the defect is the responsibility and risk of the construction contractor. The liability is not time-barred. Even if arbitrators did not apply the rules quite correctly here, the outcome is justified. The contractor must repair the defect.

TBR 2018/28. Construction Arbitration Council, March 30, 2017, No. 35,640 (Concurrence. Guarantee scheme and general terms and conditions of Woningborg. Liability for serious defect. Statute of limitations. Liability after completion of repaired work).