Judge Criticizes Unregulated Property Inspection Sector After $500,000 Leak Case

Justice Peter Andrew has delivered a scathing critique of the unregulated pre-purchase property inspection sector in New Zealand, following a landmark court ruling that awarded $500,000 in damages to a first-home buyer who ended up with a rotting, leaky house. The case highlights deep flaws in the industry, where multiple inspection reports failed to identify serious weathertightness issues in a property in Onehunga, Auckland.

The property in question was sold in 2021 for $773,000, but within six months of the purchase, the new owner, Angelina Vanifatova, discovered that the home was leaking severely. Vanifatova had commissioned a pre-purchase inspection from a firm owned by Ryan Clifford, who later settled a $75,000 claim with her for a “flawed” report. Clifford has since exited the industry and expressed that the ordeal had been “life-changing” for both him and his client.

Justice Andrew’s ruling noted that the property had been inspected three times before its sale. Two of the reports cleared the home of any significant issues, while only one identified elevated moisture levels and recommended further investigation. The vendor, the Wang family, had also commissioned their own report, which falsely claimed the property was “well maintained.”

Following the discovery of the leaks, Vanifatova commissioned expert consultants, who found “weathertightness failure” and “decay damage” in the property. These issues, the court noted, were likely apparent to the previous owner and had only been superficially addressed prior to the sale. The judge ruled that the vendors had deliberately withheld information and carried out “concealment works” to mask the damage, ordering them to pay over $500,000 in damages and costs.

The case has drawn attention to the lack of regulation and standards in the pre-purchase inspection sector. Gerard Ball, a chartered building surveyor and expert witness, testified that the industry is unregulated, and that formal qualifications, membership in professional institutions, or indemnity insurance are not mandatory. “Anyone who is so-minded can set themselves up as a pre-purchase inspector and produce reports,” Ball stated.

Justice Andrew acknowledged the limitations of pre-purchase inspections, noting that they are “entirely visual” and rely heavily on the inspector’s personal knowledge and experience. Non-invasive tools like moisture meters and infrared cameras are used, but they are not foolproof and are influenced by local conditions.

Consumer Affairs Minister Scott Simpson emphasized the importance of trust in the building inspection process, stating that homebuyers are making one of the most significant investments of their lives. Under the Fair Trading Act, businesses must provide true and accurate information about their services. Simpson expressed confidence in existing laws, but also stressed the need for businesses to meet the expected standard of care and skill in their work.

The case is not an isolated incident. Similar issues were reported in a 2020 case involving a leaky home in Manukau, where the vendor was ordered to pay nearly $1 million in damages. These cases have sparked calls for greater regulation and accountability in the property inspection sector.

As the debate continues, Justice Andrew’s ruling has once again underscored the urgent need for reform in an industry that is vital to the trust and safety of homebuyers across the country.