First stop the rot and then sue for the lot

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The Independent Online
ANYONE who has hadto foot the bill to correct any manifestation of damp in a property will understand the temptation to paint over it, hope no one notices and sell fast. But what if you are the buyer and discover your new home is a slowly rotting nightmare?

Within two months of moving into their first flat, part of a converted house in west London, Colin and Amanda (not their real names) discovered they had dry-rot in their living- room. The estimate for treating it was pounds 1,000, plus pounds 1,000 to replace the parquet floor.

Colin and Amanda bought the flat from a builder who had renovated it. They were convinced that he knew about the dry-rot and had deliberately obscured it.

First, the infected part of the wall had been covered with paint of a different texture to that elsewhere (Amanda remembered that on their initial brief viewing, the wallpaper in this part of the room was bubbling). Secondly, the specialist who provided the estimate said that considering the extent of the renovation, the builder must have known.

In addition, it emerged that there had been dry-rot in another flat in the building. The owner of that property had written to the other occupants, including the builder, to warn them.

The couple investigated the possibility of claiming on their insurance, but found dry-rot was excluded. This is standard in house insurance policies, which are designed to cover damage from 'sudden events' rather than 'gradually creeping' causes, such as damp.

They next investigated whether their surveyor had been negligent and was thus liable. Unlike 80 per cent of house-buyers, who rely on the valuation survey as a guide, Colin and Amanda had paid for a separate survey. But the report made no mention of dry- rot. The surveyor had however, identified damp and had recommended that they seek further expert advice. This was the limit of his duty.

Next the couple considered suing the builder, but by now they had a newborn baby and were unwilling to become embroiled in a legal battle of uncertain outcome. Conscious that dry-rot spreads fast, they decided to cut their losses and in April, six months after the initial discovery, paid for the treatment.

In fact, it seems likely that they had a good case, especially given the evidence that the builder knew about the problem. A legal precedent was set last year that obliges a vendor to make a full and accurate disclosure about the physical condition of the property if asked. Since the buyer's solicitor asks detailed questions about the physical condition of the property as standard procedure, the builder will almost certainly have been in breach of this obligation.

According to Edwin Lee, a partner at London solicitors William Heath, the builder might also have been liable if he had knowingly misrepresented the condition of the property.

Amanda and Colin could still bring their case: they are entitled to sue for breach of contract up to six years after the event.

Whether this would be worthwhile financially is another matter. Had the amount at stake been pounds 1,000 or less, it could have been handled in the small claims court, where there is no entitlement to recover litigation costs. As it stands, the case would be heard in the county court where the plaintiffs could make a costs claim if judgment was in their favour.

However, they would need an expert witness to verify that the dry-rot existed. Adding this expense to the legal bill, their costs would probably exceed the amount they could claim.

Mr Lee recommends that those in this position seek guidance from the Law Society, pay pounds 50- pounds 75 for a consultation with a solicitor to establish whether or not they have a case, and then litigate themselves. The procedure is relatively simple, and court staff should help. Besides, instituting proceedings can persuade people who know they are in the wrong to pay up.

Finally, do not become so embroiled in DIY litigation that you forget to fix the dry- rot. There is a theory, yet to be tested in court, that if dry-rot spreads to another property, the owner of the home it originated from could be liable.