What does fixing a construction defect cost — and who pays?
When a construction defect is discovered in a new housing company, the first question is almost always the same: who pays for the repair? The answer depends not only on the severity of the defect but, above all, on the phase of the warranty period and who carries the burden of proof. This guide explains how liability is divided, what makes up a repair cost, and how to estimate the figure correctly before commissioning any work.
Who pays? Liability depends on the warranty phase
Determining who should bear the cost of repairing a construction defect comes down to three factors: whether the issue is a construction defect or normal wear and tear, which phase of the warranty period it is discovered in, and who carries the burden of proof.
| Phase | Who is responsible for repairs | Burden of proof |
|---|---|---|
| Warranty period (approx. 0–2 years from handover / completion) | Builder, if the issue is a construction defect | Builder |
| After warranty period, before 10 years | Builder, but only for hidden/latent defects | Housing company |
| More than 10 years after administrative handover (hallinnon luovutus) | Builder no longer liable — housing company | Housing company |
| Normal wear and tear / neglected maintenance | Housing company or shareholder, per division of responsibility | — |
The key point: the warranty period is the most advantageous phase for shareholders, because the builder must demonstrate that the defect is not its fault. The later a defect comes to light, the heavier the burden of proof on the housing company. Read more: Warranty period and ten-year liability.
During the warranty period, the builder pays
During the warranty period the position is straightforward: the builder remedies construction defects at its own cost. The housing company should not pay for these repairs — neither directly nor through a renovation charge.
In practice, the process runs as follows:
- Document the defect thoroughly — photographs, measurements, location, and date. Sound documentation is the foundation of the entire claim: How to document a construction defect correctly.
- Submit a written claim and demand repair to the standard required by good building practice: Written claim to the builder. In a new RS-development the primary statutory channel for raising defects during the warranty period is the annual inspection (AKL 4:18), organised by the developer approximately 12–15 months after completion — bring all observed defects in writing to the inspection record.
- Allow the builder a reasonable period to carry out the repair and inspect the quality of the work.
If you bypass the written claim and engage your own contractor directly, you may forfeit the right to recover those costs from the builder — even if the defect itself is beyond dispute.
After the warranty period: hidden/latent defects and ten-year liability
Once the warranty period has ended, the builder is only liable for hidden/latent defects — defects that could not have been detected during a routine inspection at the time of handover. At this stage the burden of proof lies with the housing company: it must show that the issue is a construction defect that could not reasonably have been identified at handover, and that it stems from the builder’s fault.
The annual inspection (AKL 4:18, held approximately 12–15 months after completion) is the last practical opportunity during the warranty period to easily put visible defects on record. The concept of a hidden/latent defect relates to discoverability at the time of handover, not to whether a defect happened to be raised at the annual inspection.
In these cases, an independent expert’s report is often decisive. An impartial condition investigation or structural technical assessment establishes the cause of the defect and assigns liability. See also: When a housing company needs a building expert and Hidden/latent defects in an apartment.
What makes up a repair cost?
The same defect can vary enormously in cost depending on the extent of the damage and the structure affected. For example, the cost of repairing a waterproofing defect in a bathroom typically consists of the following items:
- Moisture survey and investigation — establishing the extent of the damage before repairs begin.
- Demolition and opening work — removing old tiles, levelling compound, and damaged structure.
- Renewal of waterproofing — materials and application labour, often the single largest cost item.
- Retiling and surface finishes — tile cost, grouting, and installation.
- Drying time and any secondary damage — if moisture has spread into the structure or an adjacent flat, costs rise significantly.
This is precisely why any single euro figure is always a range, not a precise number.
How to estimate costs before going to tender
Before requesting quotes, it is useful to establish the order of magnitude of the problem: are we talking hundreds, thousands, or tens of thousands of euros? Based on the defect report description and the housing company’s building data, VAREK produces an indicative repair cost estimate — a euro range, the key cost drivers, and the assumptions underpinning the estimate.
VAREK’s repair cost estimate gives a defect a euro range and breaks down the cost drivers — an indicative starting point, not a binding quote.
The estimate helps the board set aside funding, prioritise repairs, and engage in informed discussions with the builder. The final price only becomes clear by tendering the work to qualified contractors: Housing company competitive tendering. An indicative estimate is not a quote and does not replace a condition investigation.
Do not pay out of pocket for repairs that are the builder’s responsibility
The most common and costly mistake is for the housing company to repair a defect that falls within the builder’s liability using its own funds — either in haste or because responsibility has not been clarified. Keep the following in mind:
- Establish liability before carrying out any repair. If the defect falls within the warranty or ten-year liability, the cost can be claimed from the builder — in practice this may require an expert report or legal action.
- Submit a written claim first. Give the builder the opportunity to remedy the defect before engaging another contractor.
- Do not fund warranty repairs through a renovation charge. A renovation charge is intended for the housing company’s own projects, not for construction defects.
If the builder delays or disputes liability, a documented written claim submitted on time — and renewed as necessary — is your strongest card to play: When the builder evades warranty liability.
Bring costs and liability together in one place
Managing repair costs is part of a broader picture: defect reports, written claims, deadlines, and the division of liability. VAREK brings all of these together — log the defect, generate an indicative cost estimate, identify the correct legal basis for a claim, and track deadlines so that no warranty repair ends up being paid for by the housing company when the liability rests with the builder.
Contact us and make sure your housing company does not pay for repairs that are the builder’s responsibility.
This article is intended as general guidance and does not constitute legal advice. The specifics of liability allocation and cost attribution depend on the contract, the phase of the warranty period, and the particular circumstances — seek advice from a lawyer or a qualified expert where necessary.
Frequently asked questions
Who pays for construction defect repairs in a new housing company?
During the warranty period (generally two years from handover / completion) the builder is responsible for repairs at its own cost, because the burden of proof rests with the builder. After the warranty period the builder is only liable for hidden/latent defects under ten-year liability (10 years from administrative handover, hallinnon luovutus), and the burden of proof shifts to the housing company. Maintenance costs and normal wear and tear always fall to the housing company or the individual shareholder according to the agreed division of responsibility. Check the liability applicable to your specific situation with a qualified expert.
Can the housing company carry out the repair itself and charge the builder?
Possibly — but only after the builder has failed to remedy the defect following a written claim, or has refused to do so. If the housing company repairs the defect on its own initiative without first submitting a claim and giving the builder a reasonable opportunity to fix it, the housing company may lose the right to recover those costs. Document the defect, submit a written claim, and give the builder a reasonable period to carry out repairs before engaging your own contractor.
How should you estimate repair costs before going to tender?
An indicative euro range helps you gauge the scale of the problem and set aside funding. The final price only becomes clear once you have tendered the work to qualified contractors. An indicative estimate is not a quote and does not replace a condition investigation.
Should warranty repairs be funded through a renovation charge?
Not as a rule. If the defect falls within the builder's liability, the cost can be claimed from the builder — not from shareholders via a charge. A renovation charge is intended for the housing company's own maintenance and repair projects, not for construction defects that are the builder's responsibility. Check the liability applicable to your specific situation with a qualified expert.