Construction next door cracked my house: who is liable?

Damage to neighbouring buildings is the most common construction dispute in the city. Vibration from driven piles, excavation for basements and dewatering all move the ground around a site. The result is cracked walls, settled floors, doors and windows that no longer close, and sometimes structural damage that makes a house unsafe to live in.

This guide covers both sides: the homeowner who has suffered damage, and the developer and contractor who should prepare before the first pile goes in.

Who do you claim from when a contractor damages your house?

The party directly liable is the one who caused the damage: the contractor who worked negligently and damaged someone else's property. If a subcontractor did that part of the work, the subcontractor may be liable as well.

As for the developer who hired the contractor, the law says an employer is not liable for damage the contractor causes to third parties during the work, unless the employer was at fault in one of these ways:

• in the work ordered, such as requiring a method that puts neighbours at risk;
• in the instructions given, such as ordering the work rushed so protective steps are skipped;
• in choosing the contractor, such as hiring one without the ability or equipment for that kind of work.

The Supreme Court has held the developer of a high-rise jointly liable with the piling contractor, because the developer chose drop-hammer piling knowing it would shake neighbouring land severely, and having a building permit was no excuse. In another case it held that whoever the developer hires to drive the piles, the developer remains the employer and subject to the employer liability rule.

In practice, homeowners usually sue both the contractor and the developer and let the court decide who is liable and how far, because the homeowner cannot see the contract or instructions between them.

Nothing is broken yet, but the noise and dust are unbearable. What then?

The law protects landowners from use of neighbouring land that causes nuisance beyond what could reasonably be expected in the ordinary course, such as noise, dust or vibration well beyond normal construction. The neighbour may require the nuisance to stop and claim compensation.

All construction makes some noise and dust, so the question is degree: whether it goes beyond what people should have to put up with, such as working late at night, no dust screens, or vibration that knocks things off shelves. Besides a civil claim, you can complain to the district office or local authority that controls building work in the area.

What evidence should the homeowner keep?

The contractor's main defence is that the cracks were already there, or come from the house's own age. The evidence that beats this is:

• photographs of the house before work began, if any, such as dated photos on a phone;
• photos and video of every crack with a scale reference, repeated over time to show cracks growing as the work progresses;
• a record of when piling or excavation took place and when new cracks appeared;
• an engineer's report on the house giving the cause, the repair method and a cost estimate;
• letters to the contractor and developer, and their replies.

Write to both the contractor and the developer as soon as damage first appears, asking them to stop or change their method and to inspect jointly. Larger projects usually carry insurance covering liability to third parties, and early notice gets the claim to the insurer sooner.

How long do you have to claim?

A claim for damages in tort must be brought within one year of the injured party learning of the wrongful act and who is liable, and no later than ten years from the act. One year is short. A homeowner who waits for the project to finish before claiming may find the right already lost.

How should developers and contractors prevent this before starting?

A dispute with neighbours stops work and damages the project's name. Prevention before work starts costs far less.

• Survey and photograph neighbouring buildings before work begins, inviting the owners to inspect and sign the record.
• Choose foundations suited to the site, such as bored piles instead of driven piles where neighbours are close.
• Take out insurance covering liability to third parties, with limits suited to the site.
• Make the construction contract say clearly that the contractor is liable and must reimburse the developer for any damages paid to third parties.
• Set up a channel for neighbours' complaints and answer within a fixed time.

This page is general information, not advice on your situation. The liability of contractor and developer depends on the facts and evidence in each case. If your house has been damaged by construction next door, send the firm the photographs and engineer's report promptly, because the time limit is short.