Shell Cove homes approaching warranty cliff: Lawyer

"There are a lot of people who are in a very inflexible state, because they're coming towards the end of six years [since their house was built], and as soon as that hits [Frasers] has no obligation to do anything, and [homeowners] are left with what they've got," Alyce Fisher, associate at Wollongong law firm Maguire and McInernery said.

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The two year and six year periods that Ms Fisher is referring to are the warranty periods that builders by law have to insure for. Minor defects can be claimed within two years, while major defects like waterproofing and structural issues can be claimed within six years.

An investigation by the Mercury has found a large proportion homes throughout the 300 block precinct have been affected by a "design fault" that has caused internal leaking. Frasers is currently working to rectify the issue, with 12 teams on roofs but scaffolding remains throughout The Waterfront residential area, in what was meant to be the jewel in the crown of Shell Cove.

With some homes in Shell Cove having passed the five year mark, and with Frasers expecting work could take up to 18 months to rectify known design faults, it will not be long until some homeowners may be left having to cover the cost of making their home liveable themselves.

"Frasers has no obligation to fix anything after six years," Ms Fisher said. "They might do it because they're nice, but at the end of the day, there's no obligation."

Ms Fisher has seen first hand the kinds of defects that residents are experiencing. Working for multiple clients, she has fielded complaints with waterproofing and facades causing internal leaks.

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Initially, homeowners unhappy with the quality of their build can go to NSW Fair Trading, which can issue a work order requiring the builder to fix the defect. So far, at least one homeowner has had major defects resolved through a work order issued by Fair Trading.

In one case, after a work order was issued by Fair Trading for an initial defect, further inspection found more defects than were apparent.

If Fair Trading doesn't issue a work order, or a homeowner is too close to the two or six year cut offs, they can then go to the NSW Civil and Administrative Tribunal (NCAT). There, NCAT can also issue a work order, award costs or require the builder to pay out damages.

In all the cases Ms Fisher has been involved in that have reached NCAT so far, Frasers has settled before going to a hearing.

While this is not unusual for NCAT matters - 90 per cent do not proceed to a contested hearing - what has been unusual is the number of matters arising from a single development and in some cases, the extent of rectification required.

"In a number of cases Frasers have put up clients in alternative accommodation and paid for that alternative accommodation," Ms Fisher said.

"It indicates how bad the damage is or the defects are because it means that the person can't live in there while they're rectifying the property.

"I've never seen so many houses in one area be affected so badly."

A Frasers spokesperson said it had only one NCAT proceeding with a customer at Shell Cove.

"NCAT dismissed the proceeding in December 2022 prior to a hearing, and Frasers Property has since completed those rectification works."

While Frasers has committed to fixing the defects found so far, homeowners are largely left at the mercy of the limited compensation schemes if a build goes wrong. A six-year cut off for major defects when residents expect to live in their homes for upwards of 20 years has previously been seen as inadequate, and submissions to the NSW Legislative Council's inquiry into building regulations in 2019 identified the time length as an issue, with the City Futures Research Centre at the University of NSW determining the six and two year cut off are "inadequate" and "a major challenge".

The committee recommended that the government extend the warranty time period to seven years for all major and minor defects.

The Frasers spokesperson said the company's priority was completing rectification works.

"We have dedicated comprehensive resources including 12 specialist remedial teams to this program. We are part of a global group which has operated in Australia for 100 years and as we have promised, all remedial works will be completed under warranty to a high-quality standard."

However, warranties only resolve an issue after the problem has arisen, and Ms Fisher highlighted the role of private certifiers as key to making sure that defects do not occur in the first place.

"Certifying needs to change, if the certifying stage is done correctly, then I think the industry would be a lot safer," she said.

"The overseeing agency, the private certifying authority have missed the mark, because they haven't picked up these issues, as they're supposed to.

"Someone's dropping the ball."

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