There is a need for legislation regarding the duties and obligations of all involved in the construction of a building

A lack of contractual liability or statute limitation when it comes to any hidden defects, failures or defective materials and consequential damages to apartment owners, which may arise after the construction and delivery of an apartment building, can create a serious issue.

There is a legislative gap and lack of protection for owners that should be filled, especially with the increasing demand and development of apartment buildings.

There is no competent established body that controls construction work and the materials used and whether they are suitable. Also, due to a lack of staff, the people who work on construction sites are mainly not qualified or licensed workmen and many are foreigners, without a work or residence permit.

The necessary safety and health measures are not observed, as they should be, and the inspections carried out by the labour office are limited to checking for employment permits and payments of contributions to the various funds.

The legislative and regulatory framework to impose liability on land developers who use building contractors is lacking. Their liability is limited to the provisions of a sale contract signed between them and a buyer, the content of which often does not protect the buyer.

Due to the lack of contractual liability and legislative framework, architects, designers or even the authorities issuing the permits may also escape liability.

Additionally, those who buy an apartment from the original buyer, have no right to invoke the existence of any contractual liability against any person.

Decision of court of appeal

The Court of Appeal in C.A.10/2019, dated June 4, examined the decision of the court of first instance against a company that built an apartment building and sold the apartments. It was found by to have committed professional negligence during the construction of the building and the court awarded the buyer of an apartment, who purchased it from the original buyer, €111.000 for the reduction in its purchase value, €8.104 for the cost of repairing the damage and €110 as a contribution to the costs of an Etek expert. The decision of the Court of Appeal was very interesting.

The buyer’s claim was that after hey moved into the apartment, he noticed serious defects, such as cracks in the walls, damage to the floors and general problems throughout the building.

The company denied that it was negligent and claimed that it had delivered the apartment building to the various buyers of the apartments, without any problems. It also claimed that it had no responsibility for the maintenance of the apartment building and that it had no contractual relationship with the buyer, so that an issue of liability against it could arise.

The Court of Appeal in its decision emphasised that, in order for liability for negligence to arise, there must be a duty of care. The peculiarity was that the buyer was a subsequent buyer, that is, a person with whom the company had no direct relationship. The legal authority invoked by the court of first instance was overturned by a later decision and the company’s complaint was determined to be well-founded.

It indicated that the position of English case law, reflecting the common law, is that in tort, local and other authorities issuing relevant permits, and by extension contractors, construction companies, architects and designers, do not owe a duty of care to subsequent purchasers for financial loss, such as repair costs or reduction in purchase value.

An actionable right under the contract of sale is acquired by the subsequent purchaser (assignee) only when there is an assignment of rights by the original purchaser (assignor) and this, provided that it is not prohibited by the contract itself.

Court of Appeal’s suggestion

The Court of Appeal indicated that in England, subsequent purchasers have not been left unprotected against “hidden” damage/defects that come to light at a later stage and there is relevant legislative protection. It stated in the form of a parenthetical comment that the issue should possibly concern the legislature in Cyprus.

Modern, extensive, protective legislation, which clearly sets the framework of the duties and obligations of all those who contribute to the construction of a building is needed to protect those who buy a building from defects, bad workmanship and structural and other failures.

Obviously, for the protection to be effective it should have a long limitation period.

Following the above legal analysis, the Court of Appeal found the appeal well–founded and annulled the first instance decision, with costs.

George Coucounis is a lawyer specialising in Immovable Property Law, based in Larnaca. E-mail: [email protected], tel: 24818288