A housing supplier has to choose which measure he/she will take in order to secure financial resources in case of defect occurrence between ”taking out housing insurance“ and ”deposit of set amount of money”.
The Act also requires that a housing supplier explain his/her method to the home owner when constructing or selling a new house.
Scope of housing defect warranty liability
The parts covered by the 10-year defect warranty liability under The Act are major structural parts and parts to prevent rainwater leakage.
Mechanism of housing insurance
The housing insurance is provided by housing insurance companies that are designated by the Minister of Land, Infrastructure, Transport and Tourism. If a defect is found within 10 years after the handover and the housing supplier carries out the repair work, the cost of the repair will be covered by the insurance money.
Direct claim for insurance payment - consumer protection mechanism
In cases where a housing supplier cannot carry out a repair work due to bankruptcy or other reasons, the home owner can make a claim for the costs of repair and others (direct insurance claims).
Another way of securing financial resources
The alternative method of securing financial resources for housing suppliers is to deposit certain amount of money at designated institutions such as a regional legal affairs bureau.
Direct claim for a refund at the depositary institution - consumer protection mechanism
A home owner may claim the amount of repair and other costs at the depositary institution if the housing supplier cannot carry out a repair work due to bankruptcy or other reasons.