Home guarantee headaches as insurer fails
Owners of newly built properties are being told there are options to replace the guarantee backing their homes.
Up to 10,000 recently built homes are covered for shoddy building work by Builtin’s 10-year Homefirst Builders Guarantee, which is backed by CBL Insurance.
But CBL was put into interim liquidation last month, and said it could not pay claims.
Platinum Homes clients Teresa Cook and her husband, Roger, have been caught up in the insurer’s failure.
They are still waiting for their house to be built with Platinum Homes in Levin, and are living onsite in a caravan.
They sold their house in the Wellington suburb of Tawa when they signed an agreement to have their new brick-and-tile home built in October 2016.
The Cooks took out the insurance policy, which was intended to give them peace of mind through the drawn-out build, but were worried what would happen without CBL to honour it.
There is only $53,000 left of the $345,000 construction price to pay but the house is still not inhabitable.
There’s no kitchen, painting work is still to be finished and there is no carpet, among other problems.
Platinum Homes chief executive Shaun Riley said his firm was waiting for a report from the liquidator to get a clearer idea of its next steps.
‘‘This came as a shock to us as CBL is a publicly listed company that has been around a long time. There’s nothing in their last annual report or any disclosures that would have caused concern until a few weeks ago.’’
Stamford Insurance has offered to take over some policies. There will be a cost involved, which will vary according to the type and stage of the development.
Whether it is paid by the building companies or the homeowners would be a matter for them to decide, Stamford director Duncan Colebrook said.
For buyers who have signed a contract and paid a deposit where work has yet to start, Stamford will cover the risk that they may lose their deposit if their builder becomes insolvent.
Colebrook said: ‘‘We had to move quickly to prevent the situation spiralling out of control with many home-buyers possibly in breach of their mortgage conditions and dependent on this insurance to be able to proceed with their purchase. Builders, too, were worried for their clients.’’