Developer wants indemnity in exchange for €1m to fix faults, residents told

The developer of hundreds of Dublin apartments affected by building defects is withholding a €1 million contribution to fixing the faults, and demanding an indemnity from future litigation before paying any money over, owners of the apartments have been told.

Simonsridge in Sandyford in south Dublin, which consists of 632 apartments, was built in 2006 by developer Shannon Homes. Issues first came to light last year after a preliminary investigation uncovered a range of potential fire safety issues in common areas, as well as other structural and fire-stopping elements.

According to correspondence sent to apartment owners at Simonsridge in March of this year Shannon Homes had agreed, following an “intensive negotiation process”, to contribute €1 million towards the fire remediation process at the apartments.

The development’s owners management company (OMC) – a legal entity composed of all the apartment owners in a development, which is in charge of running apartment blocks – told owners: “This is one million euros of hard cash that will be handed to the OMC with immediate effect, to apply to our fire remediation project.”

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According to the letter, it was hoped at the time that the contribution from Shannon Homes, in addition to a €2,000 levy placed on all apartment owners would “be sufficient to make all of our apartments fire-safe, and to make all of our apartments sellable”. Some works, funded by the levy, are already underway at the apartments.

However, in an email sent to all apartment owners on Monday night, Simonsridge OMC wrote that it is “encountering significant difficulty finalising matters with Shannon Homes”.

“Despite the ongoing efforts of the board [of the OMC], the agreement made has not been honoured. We have not received any contribution from Shannon Homes, never mind the €1 million agreed,” the email reads. It states that the developer is also demanding assurances from apartment owners and the OMC “to reduce any further potential liability”.

“Specifically, Shannon Homes now require that 100 per cent of OMC members vote to accept an indemnity to Shannon Homes with respect to any future litigation from owners in consideration of the payment of the €1 million,” the email states.

“As you will no doubt appreciate, this request is unrealistic as none of us knows what the future might hold in respect to our development. It is also a major deviation from the agreement made,” the directors of the OMC told residents.

Neither Shannon Homes nor the OMC responded to requests for comment made a number of times this week.

The March correspondence to the apartment owners also reveals the terms of a deal which it is claimed had been struck between the developer and the OMC.

Common areas

As part of the agreement, a Shannon Homes subsidiary involved in the development would be “allowed to proceed with their strike-off application”, which apartment owners had objected to. Common areas in the development which were still owned by the developer would be transferred to the OMC. The apartment owners would also give an undertaking not to make a submission to An Bórd Pleanála regarding a nearby project currently being developed by Shannon Homes, the 496-unit Taylor’s Lane project.

Concerns about the development were initially raised last year after a preliminary investigation uncovered a range of potential fire-safety issues. These issues were passed on to Dublin Fire Brigade, which in turn asked Shannon Homes to undertake a full investigation at the scheme.

Later investigations on a sample of apartments revealed “a significant number of fire-safety deficiencies with workmanship and building materials”. A report on the development found that a fire could spread and breach protected hallways within apartments in less than 30 minutes.

Pipes passing through compartment levels of apartments were not fitted with fire-rated collars and “internal protected hallways do not extend to the underside of the concrete slab above”.

The cost of remediating the issues was estimated at up to €14,000 for each apartment, with up to another €30,000 for remedies to each of 32 common areas, meaning repairs could cost up to €10 million. However, the report noted that significant cost savings could likely be achieved.

In November, apartment owners at the Sandyford development voted to accept a €2,000 levy per apartment, to be imposed in two tranches. They have been told that they face a second levy to fix the defects if Shannon Homes does not come forward with a contribution.