Family's 'worst nightmare' after purchasing home filled with defects

The dream of buying a home has become a nightmare for two families who were sold houses filled with defects, with the builder now facing tens of thousands of dollars in fines over the project.

Last year, two homes built on a subdivided block in Adelaide's northern suburbs were listed for sale, described as "masterfully constructed".

For Rimple and Preet Sharma, it appeared to be a great option for their young family, and they invested their life savings into purchasing one of the two $800,000 homes.

"We have expected [it] to be a safe home, a good house for our family — which should be complying, and up to the building standards, but we didn't get anything like that," Ms Sharma told ABC News.

"[We] are seeing it as a bad nightmare. It is the worst nightmare for us."

The couple put an offer on the property late last year, which was accepted, and they ordered a building inspection.

When the building inspection report came back, multiple concerns were raised, including holes in the walls and ceiling plastering, a failure to weatherproof the house and problems with plumbing and drainage.

In email correspondence seen by ABC News, the vendor assured the Sharma family the outstanding work would be finished before settlement, and that "cosmetic" items including paint touch-ups and plaster rectification were "standard handover items and will be completed as part of our normal finishing process".

But as the deadline loomed, the couple said many of the promised fixes were not complete.

The vendor, Khorshed Alam, an owner-builder who is also a home loan advisor with a credit union, rejected suggestions that nothing had been done.

In email correspondence seen by ABC News, he said all safety-related matters raised in the building report had been rectified and "do not provide grounds to delay settlement".

'We were helpless'

As settlement approached, Ms Sharma said they had already given notice on their rental property, and with no family support nearby, and concerned about losing their $50,000 deposit, she and her husband felt they had no other option but to go ahead with the purchase, despite the fact a number of raised concerns had not been resolved.

"At that time, we were helpless and it was just three days before the settlement, and we can't move back," Ms Sharma said.

"We were hoping that everything will be fixed and maybe finished, but when we moved here, we saw that nothing has been done."

After the family moved in, Ms Sharma said a council representative came to the door with bad news.

"He said, 'I just want to [make you] aware you guys … can't live in this house, because this house has so many defects, and it hasn't any occupancy certificate'," Ms Sharma recalled.

The council confirmed to ABC News it had initially revoked the certificates, which guaranteed the two new builds were safe to live in.

The certificates were reinstated, but in a letter sent to residents sighted by ABC News, the council advised the new owners to seek independent legal advice about the "unsatisfactory and outstanding building work" and referred them to Consumer and Business Services.

"Council continues to hold concerns regarding the dwellings constructed at the above address, particularly in relation to the quality of the building work and resultant appearance and overall standard of the development," the letter stated.

'Tendency to disregard important legal obligations'

Last Friday, Consumer and Business Affairs Minister Michael Brown issued a public warning notice about eight traders, including Khorshed Alam, that had been fined by the Consumer and Business Services' Building Industry Response Team.

Mr Alam was fined $75,000 for three counts of operating without a licence, and three counts of performing building work without building indemnity insurance, for the two properties and another also in Adelaide's northern suburbs.

"I have determined to issue this notice because I consider Mr Alam has demonstrated a tendency to disregard important legal obligations, such as requirements to hold a building work contractor licence and requirements to obtain builders indemnity insurance," Mr Brown said in the public notice.

Last month, before the fine had been issued, Mr Alam's lawyer told ABC News he was in discussions with Consumer and Business Services.

"As those discussions are ongoing, and our client is currently in the process of obtaining legal advice, our client does not consider it appropriate to provide further comment at this time," the lawyer said in a statement.

The ABC reached out to Mr Alam's lawyer on Monday for further comment.

Calls for consumer protections

Under South Australian law, an owner-builder cannot construct multiple properties as a business.

Anyone who sells or rents two or more buildings that they have built or improved within five years is considered to be a building work contractor.

If building work costing $20,000 or more is contracted, and the project requires council approval, building indemnity insurance must be taken out by someone with a builder's licence.

Master Builders SA chief executive Will Frogley said the legislation was open to abuse.

"Unfortunately, some people can take advantage of that, if it's not closely monitored,"

Mr Frogley said.

"We are concerned that people are posing as owner-builders, to essentially avoid the requirements of a licensed builder."

Mr Frogley said the construction peak body had been calling on the state government to do more to protect consumers, because, he said, the state lagged behind other jurisdictions.

Mr Frogley said Master Builders had asked the government to introduce a permit system to "keep a closer eye on those owner-builders and let them know they are being watched".

One building inspector who spoke to the ABC said he had inspected both buildings and had major concerns about the structural safety of the homes.

Watchdog investigation underway

Consumer and Business Services Commissioner Brett Humphrey said the watchdog was also investigating potential breaches of Australian consumer law in relation to Khorshed Alam's builds.

"We really feel for the consumers that have purchased these homes in good faith, and now there's defects with the property due to the standing of building, if you like, and aren't covered by any builder's indemnity insurance," Mr Humphrey said.

"If the offences against the trader are proven, there's opportunity for compensation through the court process."

Mr Humphrey said the investigation included other tradespeople.

"We are currently looking at the building supervisor in relation to the suitability of him holding a licence and any other enforcement activity."

The owner of the second $800,000 property on the site, who did not wish to be named, said the situation was seriously impacting her mental health.

She works in aged care and had spent eight years saving for a deposit to buy her own house.

"I felt betrayed because this is just too much to bear," she told ABC News.

"When you stay here, you keep seeing the defects in the house.

"I'm not focusing, I can't sleep properly."