Disputes over Liability Continue Even After the Warranty Liability Period Ends | Defect Management Risks That Construction Companies Should Review

According to the report, problems related to warranty liability appeared concentrated in the following types.

In some cases, after completing defect repairs, the prime contractor filed a reimbursement (indemnity) claim lawsuit against the subcontractor.

Subcontractors sometimes accept such demands for reasons such as maintaining the business relationship, and as a result, a problem arises in which the defect liability structure is maintained in an unbalanced form.

Under this structure, a situation may arise in which residents' requests for defect repairs go unresolved for a long period.

In addition, an environment is forming in which defect-response capability is linked to a company's quality management level and its management evaluation factors.

Accordingly, some construction companies have recently been strengthening their defect management frameworks by operating resident support centers or customer-response organizations.

These moves show that defect response is increasingly recognized as an important management task even in the post-construction management domain.

The warranty liability period for multi-family housing is prescribed differently by type of construction work under Appended Table 4 of the Enforcement Decree of the Multi-Family Housing Management Act.

The principal liability periods are as follows.

The project proponent bears responsibility for defect repairs during the relevant period.

Under Article 36 of the Multi-Family Housing Management Act, if a serious defect arises in a load-bearing structural part within the warranty liability period, the project proponent also bears responsibility for compensating for the loss caused by the occurrence of the defect.

The commencement date of the liability period is also clearly prescribed by law.

The exclusively owned portion refers to the interior space of an individual unit, and the common portion refers to facilities used jointly, such as staircases, corridors, exterior walls, and the structural frame.

Structural defects may not become apparent immediately after completion.

For example, problems such as internal cracking in a concrete structure or ground settlement are often confirmed only after a certain period of time has passed.

If the nature of a defect is judged to be a problem related to the structural safety of the building, the scope of liability may be re-examined, so caution is needed.

Some defects do not become outwardly apparent for a long time and are discovered only belatedly.

Defects such as flaws in a waterproofing layer or piping leaks sometimes appear in the form of actual leakage or functional abnormality only after a certain period has passed.

In such situations, a time gap exists between the time the defect arises and the time it is discovered, and this point is treated as an important issue in the course of a dispute.

A liability issue may also arise where managerial fault is confirmed in the design or construction process.

If an error that occurred during the construction management process affected the safety or function of the building, liability for damages under the Civil Act may be examined.

In such a case, the scope of liability may be discussed separately from whether the warranty liability period has elapsed.

In the construction industry, a trend is appearing in which the issue of responding to multi-family housing defects is linked to a company's liability management and management evaluation factors.

This is because multi-family housing defect issues reflect not only construction quality but also a company's reliability and its level of responsible management.

In its report titled "Directions for Establishing ESG Management at Construction Companies Centered on Apartment Warranty Liability," published by the Korea Research Institute for Construction Policy, the need to introduce ESG management indicators related to multi-family housing warranty liability was raised.

The report suggests that it may also be necessary to consider a plan to treat construction companies that have established a defect-response framework and a resident-response organization as evaluation targets and to provide them with incentives.

This discussion shows that construction companies should recognize a defect management framework as a management domain at the corporate level.

The vulnerable points repeatedly confirmed in the course of advising construction companies are as follows.

These factors can become causes that slow response time and expand the scale of a dispute when one arises.

Representative response strategies are as follows.

In particular, parts where long-term defects may arise, such as structural frames or equipment, should be managed through an advance inspection framework.

Such a management framework helps with both dispute prevention and corporate risk management.

In construction defect disputes, structural safety issues, managerial responsibility in the design and construction process, and the contractual relationship between the prime contractor and subcontractors operate together.

Accordingly, a company needs to examine technical issues and legal liability at the same time.

At Daeryun Law Firm LLP, attorneys experienced in construction matters, attorneys with experience as in-house counsel at large construction companies, and attorneys handling fair trade matters collaborate to support a comprehensive response to multi-family housing defect issues.

By conducting legal review and technical analysis together, the firm provides advice so that companies can review defect issues in advance and establish a management framework.

Multi-family housing defect issues can lead to disputes even years after completion.

Therefore, from the standpoint of a construction company, organizing a management framework through advance inspection is more important than responding after a defect has arisen.

Daeryun provides legal advice together with technical review so that construction companies can establish a defect management process and a dispute-response framework.

If you need a more detailed review of responding to apartment warranty liability disputes or of establishing a construction defect management framework, you are welcome to review the relevant matter with Daeryun through the 🔗real estate attorney legal consultation reservation.