Property Management: Defect Liability Period (DLP)

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20/06/2017 - Real Estate

Our recently launched Property Management white paper investigated the most common challenges facing property unit owners during the handover and Defect Liability Period stages, suggesting relevant solutions to mitigate these issues. This column analyses the systematic procedure during the Defect Liability Period.

The DLP takes place post practical completion. Practical completion is achieved when the project requirements and contractual obligations have been fully met. The main objectives are to detect omissions and outstanding defects during the post-handover phase and to ensure the contractors are engaged in rectifying them. All maintenance activities during this period must be monitored and recorded in a defect record report.

There is a general misconception that DLP is limited to a period of 12 months. The reality is that some parts of the building are subject to a longer DLP period. Waterproofing, for example, has a warranty period of 10 years.

It is essential for the developer to involve the consultant in the DLP, keeping them up to date on all relevant matters. Once an issue is detected, the Residential & Commercial Asset Manager (RCAM) is responsible for informing the developer of their contractual responsibilities during the DLP phase. The developer will coordinate with the consultant and they will inform the contractor in turn.

The contractor is required to document and repair defects in a timely manner. The RCAM must ensure that the rectification of those defects does not interfere with the smooth operation of the building. An appropriate timeframe will be given to the contractor depending on the severity of the fault.

The typical faults discovered during the DLP can vary and accordingly, affects the period required for rectification as illustrated below:

1) Notice from the Facility Management company – one day
2) Investigate the problem – two days to two weeks
3) Rectify the problem – six days to three weeks

When the scope of work falls under the responsibility of the sub-contractor during the DLP, it is the contractor’s job to ensure all unfinished work is completed. If the sub-contractor fails to meet their obligations the responsible contractor will either carry out the work themselves or hire a third party.

If work has not been completed until after the DLP period has expired, the contractor is accountable for completing it. Before the DLP expires, the RCAM should notify the contractor of the issues that still require rectification.

Maintenance activities are also monitored during the DLP, enabling additional defects to be detected. Maintenance records, maintenance activities undertaken, and defects identified and rectified must be filed in a defects report. A weekly meeting should take place involving the RCAM, the Owners’ Association (OA) (in case of a strata building), and the contractor to ensure all parties are kept updated on issues affecting the building.

For detailed procedure, please click here to access our Property Management white paper.