Can You Claim Against a Finance Company for Spray Foam Insulation?

What Homeowners Need to Know About Spray Foam Insulation Claims

For homeowners experiencing problems with spray foam insulation, one of the biggest practical difficulties can be identifying someone against whom a successful claim can actually be enforced.

The company that installed the spray foam may have stopped trading. It may have been dissolved. It may have little or no money or inadequate insurance. In those circumstances, having a valid claim against the installer does not necessarily mean that compensation will ever be recovered.

That is why the way the spray foam insulation was paid for can be extremely important.

If all or part of the installation was funded using certain forms of consumer credit, the Consumer Credit Act 1974 may provide a route to bring a claim against the lender or finance provider as well as, or sometimes instead of, the installation company.

For homeowners whose spray foam insulation was installed poorly, caused damage to their property, or was sold on the basis of inaccurate representations, this can make a significant practical difference. This article explains when a finance company may potentially be responsible for a spray foam insulation claim, what Section 75 of the Consumer Credit Act does, what evidence is likely to be required and how MJV Solicitors approaches these claims.

Can I Claim Against the Finance Company That Paid for My Spray Foam Insulation?

Potentially, yes.

Under Section 75 of the Consumer Credit Act 1974, a creditor can, in qualifying circumstances, be jointly and severally liable with a supplier where the consumer has a claim against the supplier for breach of contract or misrepresentation. In broad terms, this can mean that where a spray foam installer carried out defective work or made an actionable misrepresentation, a homeowner may have a corresponding claim against the lender that financed the transaction.

However, Section 75 does not apply automatically simply because finance was used.

The precise credit arrangement, the cash price of the transaction, the relationship between the supplier and creditor and the legal basis of the underlying claim all need to be considered.

Why Does the Finance Agreement Matter in a Spray Foam Insulation Claim?

Many spray foam insulation installations were sold using finance arranged at the same time as the work.

A salesperson may have attended the homeowner’s property, recommended spray foam insulation and then arranged finance so that the installation could proceed without the homeowner paying the entire price upfront.

Years later, the homeowner may discover problems when:

• trying to sell the property;
• remortgaging;
• applying for equity release;
• obtaining a building survey;
• discovering damp or condensation;
• finding deterioration within the roof;
• being advised that the spray foam was installed incorrectly.

At that stage, the original installer may no longer be an attractive defendant.

This is not unusual. The House of Commons Library has recorded the difficulties faced by homeowners who have found their homes harder to sell or remortgage following spray foam installation, alongside concerns about incorrectly installed foam and the practical difficulty and cost of removal.

If a qualifying finance provider is also legally liable, the homeowner may have a claim against a regulated financial institution rather than relying solely upon recovery from an installation company.

What Is Section 75 of the Consumer Credit Act 1974?

Section 75 is an important piece of consumer protection legislation. Where the statutory requirements are satisfied, a consumer who has a claim against a supplier for breach of contract or misrepresentation can have a like claim against the creditor. The creditor and supplier can be jointly and severally liable.

In practical terms, that can allow the consumer to pursue the creditor for the recoverable loss rather than first having to obtain compensation from the supplier. This protection is well known in relation to credit-card purchases but can also arise in other debtor-creditor-supplier arrangements, depending upon the way the finance was structured.

Section 75 is subject to statutory limits and technical requirements, so the existence of a loan or credit agreement does not itself prove that Section 75 applies.

Does the Installer Have to Still Be Trading?

No. One of the major benefits of a qualifying Section 75 claim is that the consumer’s rights against the creditor do not simply disappear because the supplier has ceased trading.

That can be particularly significant in spray foam insulation cases. A homeowner may otherwise face the unfortunate situation of having:

• evidence of defective installation;
• an expensive remedial problem;
• a property that is difficult to mortgage or sell;

but no commercially worthwhile defendant because the installer has been dissolved or has no assets.

Where Section 75 applies, the lender may provide a viable alternative route to recovery.

Do I Have to Sue the Installer First?

Not necessarily. Section 75 creates liability against the creditor in qualifying cases. It is not simply a guarantee that only becomes relevant after an unsuccessful claim against the supplier.

Whether proceedings should be brought against the supplier, creditor or both will depend upon the circumstances and the legal advice received.

This distinction is particularly important where an installer appears insolvent or uninsured.

Spending substantial sums litigating against a company incapable of satisfying a judgment may make little commercial sense when a viable claim exists against a regulated lender.

What Type of Problem Must There Be With the Spray Foam Insulation?

The existence of spray foam insulation alone is not enough. Nor does Section 75 create a claim simply because a homeowner later regrets having the product installed. There must normally be an underlying legal claim against the supplier. That might arise because of breach of contract.

For example, the installation might have:

• been carried out without reasonable care and skill;
• failed to comply with the agreed specification;
• been unsuitable for the particular roof;
• been installed over existing defects;
• interfered with necessary ventilation;
• failed to comply with the manufacturer’s installation requirements;
• caused damage to roof timbers or other parts of the property.

Alternatively, the claim might arise from a misrepresentation made before the contract was entered into. Depending on the evidence, examples might include statements that:

• the installation could not affect the ability to obtain a mortgage;
• every lender accepted spray foam;
• spray foam would increase the property’s value;
• the roof had been inspected and was suitable when it had not been adequately assessed;
• the installation was approved by a particular organisation when that was not true;
• the work would cure an existing roof defect when it was not capable of doing so.

Whether any particular statement amounts to an actionable misrepresentation depends upon exactly what was said or written and the circumstances in which the homeowner entered the contract.

What Standards Should Spray Foam Installers Have Considered?

Spray foam is not automatically defective, but the suitability of retrospective installation depends heavily on the particular property. RICS warns homeowners that spray foam should be treated as a significant modification to an existing roof. Incorrect installation can interfere with ventilation, contribute to uncontrolled condensation and make the roof structure more difficult to inspect.

RICS also advises that the roof should be wind and watertight before insulation is installed and that condensation-risk calculations and thermal assessments should be undertaken as appropriate. It recommends retaining records of the roof condition, ventilation arrangements and moisture readings before, during and after installation.

These matters can become highly relevant when assessing whether the installation company exercised reasonable care and skill.

What If the Spray Foam Has Made My House Difficult to Sell?

Mortgageability or saleability problems can potentially form part of the factual background to a claim, but a failed mortgage or sale does not automatically establish legal liability. There needs to be evidence linking the loss to an actionable breach or misrepresentation.

The House of Commons Library reports that some homeowners have experienced difficulty selling or remortgaging properties containing spray foam. It also records that lenders and valuers may be concerned because the foam can restrict inspection of roof timbers or because incorrect installation can contribute to condensation and decay.

A claim therefore needs to distinguish between:

1. a lender applying its own cautious lending policy; and
2. a lender refusing to lend because the installation itself is defective, inadequately documented or technically unsuitable.

That difference can be crucial.

Does Spray Foam Have to Be Removed Before I Can Claim?

No. In fact, homeowners should be cautious about removing spray foam before appropriate evidence has been obtained.

The foam itself may be important evidence. An independent expert may need to consider:

• where it was applied;
• its apparent type and depth;
• whether roof timbers are obscured;
• ventilation arrangements;
• moisture levels;
• signs of condensation;
• evidence of deterioration;
• whether the installation appears consistent with relevant guidance.

If the foam is removed first, it may become much more difficult to prove how it was installed and what was wrong with it.

The House of Commons Library notes that industry guidance does not support automatic removal of every spray foam installation. Some properties may instead require assessment or other remedial measures.

Can I Claim the Cost of Removing the Spray Foam?

Potentially. Where removal is reasonably required because the installation was defective, unsuitable or resulted from an actionable misrepresentation, reasonable removal costs may potentially form part of the claim.

Other losses might include:

• necessary roof repairs;
• reinstatement costs;
• independent survey costs;
• wasted conveyancing expenses;
• reasonable losses arising from a failed transaction;
• additional finance costs;
• diminution in value where properly established.

Every head of loss must be legally recoverable and supported by evidence. There is no automatic entitlement to every cost incurred after a problem is discovered.

What If I Only Paid a Deposit on Credit?

This can be an important issue. Section 75 is frequently associated with transactions where only part of the purchase price was placed on qualifying credit.

The important legal question is not simply how much was paid using the credit facility but whether the statutory requirements for a qualifying debtor-creditor-supplier agreement and transaction are satisfied. The cash price of the underlying goods or services is also relevant to Section 75’s statutory monetary limits. Because the position can become technical, homeowners should provide the complete finance and payment documentation rather than assuming a claim either does or does not qualify.

What If I Paid by Debit Card?

Debit cards do not generally attract Section 75 protection because they are not providing the relevant form of credit. There may sometimes be other remedies, including chargeback in appropriate circumstances, but that is different from Section 75 liability.

If another regulated finance agreement was used alongside a debit-card payment, that agreement should still be reviewed.

What Evidence Is Needed for a Spray Foam Finance Claim?

The starting point is usually the paperwork from the original sale. Homeowners should try to locate:

• the spray foam contract;
• quotation;
• invoice;
• finance agreement;
• credit-card statements;
• deposit receipt;
• guarantee;
• warranty;
• sales brochures;
• installation certificates;
• product information;
• photographs taken before or during installation;
• emails, messages and letters from the installer.

If problems have subsequently arisen, also keep:

• mortgage lender correspondence;
• valuation reports;
• survey reports;
• buyer correspondence;
• estate agent evidence;
• removal quotations;
• expert reports;
• evidence of a failed sale;
• invoices for remedial work.

Do not discard documents because the installation took place several years ago.

What If I Cannot Find My Finance Agreement?

It may still be possible to establish how the installation was funded through:

• bank statements;
• credit reports;
• correspondence from the lender;
• direct-debit references;
• installer documentation.

A lender may also retain records.

The absence of the original paper agreement does not necessarily mean that the funding arrangements cannot be established.

Can a Finance Company Simply Say the Installer Is Responsible?

The creditor may dispute liability and is entitled to investigate whether the statutory requirements and underlying breach are established. However, where Section 75 applies, the existence of a separate supplier does not of itself remove the creditor’s potential liability.

The entire purpose of the protection is that the consumer may have a corresponding statutory claim against the creditor for qualifying breaches or misrepresentations by the supplier.

What If the Finance Company Rejects My Complaint?

A complaint may sometimes be capable of referral to the Financial Ombudsman Service, depending upon the circumstances and relevant time limits. However, an Ombudsman complaint and court proceedings are different processes. Where substantial property damage, technical expert evidence or significant financial loss is involved, obtaining specialist legal advice can help determine the appropriate route.

Do MJV Solicitors Act on a No Win, No Fee Basis?

MJV Solicitors considers spray foam insulation claims individually. We can assist homeowners who have viable claims against installation companies even where no qualifying finance agreement exists. However, claims against installers alone will generally be undertaken on a private paying basis.

This is because a significant practical risk in these cases is recoverability. An installer may have ceased trading, may have inadequate insurance or may lack sufficient assets to satisfy a judgment.

Where spray foam insulation was wholly or partly funded using qualifying consumer credit, and there is a viable claim against a lender, we may consider acting under a Conditional Fee Agreement or Damages Based Agreement, depending upon the evidence, prospects, value and circumstances.

A CFA is often described as a “No Win, No Fee” agreement, although the precise terms and potential deductions will always need to be explained before an agreement is entered into.

We Do Not Pursue Buyer’s Remorse Claims

It is important to distinguish a genuine legal claim from dissatisfaction with a decision made several years ago. We do not generally pursue claims simply because a homeowner:

• has read negative publicity about spray foam;
• has changed their mind about the product;
• would prefer traditional insulation;
• has been told by a cold caller that all spray foam must be removed.

A viable claim normally requires evidence of defective work, breach of contract, actionable misrepresentation or another recognised legal wrong causing loss.

Need Advice About a Spray Foam Insulation Claim?

How spray foam insulation was paid for can be just as important as how it was installed. A homeowner may have strong technical evidence showing that the work was defective, only to discover that the installation company has ceased trading and cannot meet a judgment. A qualifying Consumer Credit Act claim can potentially provide an alternative defendant with the financial resources to satisfy a successful claim.

That does not mean every financed spray foam installation gives rise to compensation. The underlying breach or misrepresentation still needs to be established, the credit arrangements must fall within the relevant legislation and the financial loss must be proven.

If you have experienced problems with poorly installed spray foam insulation and some or all of the installation was paid for using finance or credit, retaining your paperwork and obtaining early advice can be extremely important.

Speak to MJV Solicitors

If you think you may have a spray foam insulation compensation claim, get in touch, and our team will review your situation.

Call: 01253 858231

Email: info@mjvlaw.co.uk

Make an online enquiry.

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