Should New Owners Corporations Obtain Building Defects Reports?

Short answer is yes, Why?

  1. For the reasons set out below in the UNSW research, which are supported by our experiences below.
  1. Pre-purchase inspection reports obtained by lot owners concern their own individual lots and usually do not involve an inspection of the whole of the building. It is neither the strata manager’s nor the caretaker’s role to report on defects in the common property
  1. Fire safety consultants who issue annual fire safety statements do not report on breaches of statutory warranties in fire measures
  1. The strata reforms were to provide that developers were to pay for a defect report on the whole of the building within 12 to 18 months of completion of the works, but these reforms have delayed until 2016.
  1. So that an owners corporation can become aware of any losses and take appropriate action within the relevant statutory periods.

UNSW Research

Reproduced below is an extract from the University of New South Wales’ report dated May 2012 ‘Governing the Compact City’ by Hazel Easthope, Bill Randolph and Sarah Judd representing the answers from 1011 respondents to the question ‘To your knowledge, have any of the following defects ever been present in your strata scheme?’

Reproduced with permission of City Futures Research Centre.

 

Our Experience

In line with the above, some of the results from our experience are set out in the below table.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

Locality Approx number of Lots Broad categories of defects

Approx rectification costs (excl. legal and expert costs)

Ashfield Council 160 General and fire safety defects $100,000 with rectification by the builder
Auburn City Council 80 Water penetration, fire safety defects, cracking $2,000,000
Bankstown City Council 70 Water ingress, tile defects, garage defects $1,000,000
City of Canada Bay 50 Tiling defects, render defects, fire safety defects, water ingress $900,000
City of Canada Bay 70 Waterproofing, cracking,  landscaping $150,000
City of Ryde Council 30 General building defects, fire defects $300,000
City of Sydney 15 Waterproofing and incomplete works $170,000 with rectification by the builder
City of Sydney 15 Waterproofing, cracking, general defects $2,500,000
City of Sydney 30 Cracking in the car parking slab $400,000
City of Sydney 30 Water penetration, cracking, spalling render $300,000
City of Sydney 60 Balcony waterproofing, window shutters, rusting balustrades $1,500,000
City of Sydney 60 General and fire safety defects $700,000
City of Sydney 60 Water penetration, cracking, render $240,000 with rectification by the builder
City of Sydney 70 Water penetration, cracking, fire safety defects $2,000,000
City of Sydney 90 Water ingress, structural defects, balustrades $3,000,000
City of Sydney 100 Water penetration, windows and tiling issues $680,000
City of Sydney 100 Water penetration, cracking, spalling render $250,000
City of Sydney 130 Water ingress from balconies $800,000
City of Sydney 130 Window shutters corroding steel/columns, water ingress and fire defects $1,500,000
City of Sydney 230 General building defects and fire defects $2,500,000
Hornsby Shire Council 170 Balcony balustrades $800,000
Hornsby Shire Council 90 Mechanical ventilation $465,000
Hornsby Shire Council 200 Drainage, electrical and fire safety defects $220,000 with rectification by the builder
Lane Cove City Council 15 Fire safety defects, cracking, waterproofing $800,000
Manly Council 30 General and fire safety defects $1,300,000
Marrickville Council 20 Water penetration, cracking, render, water leeching $350,000
Mosman Council 20 General and fire safety defects $50,000 with rectification by the builder
Newcastle City Council 60 Water penetration, cracking, fire safety defects $2,500,000
Pittwater Council 30 Water penetration, cracking, render $300,000
Randwick City Council 40 Fire safety defects, fire sealing, fire doors $200,000
Randwick City Council 40 Water penetration, cracking, spalling render $250,000
Randwick City Council 50 Major defects to roof, and general building defects $4,000,000
Strathfield City Council 50 Cracking, non-compliant BCA items (stairs), fire defects, render cracking, rusted render angles $950,000
Strathfield City Council 80 Water penetration, cracking $1,200,000
Warringah City Council 15 Water penetration, Cracking, roof leaks $850,000
Warringah City Council 15 Water penetration, cracking, tiles,  waterproofing, balconies/roof $700,000

Why take the risk? Why wait until the owners corporation is out of time to bring an action to find out what defects exist in your scheme?

Briefs to be issued by lawyers

So, owners should firstly have a lawyer consider the time frames for statutory limitations and brief a suitable expert to prepare a building defect report for reasons including:

  • that the report is prepared in a format that can be used in legal proceedings;
  • it addresses any breaches of statutory warranty appropriately and does not address maintenance issues;
  • it identifies lot property and common property issues;
  • so it identifies suitable remedial scopes of work to rectify the defect issues;  and
  • to maintain legal professional privilege.

 

***The information contained in this article is general information only and not legal advice. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any action or otherwise rely upon its contents in any way.

 

Prepared by Bannermans Lawyers

2 December 2014

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For more information on this topic or any legal enquiries please contact your Strata Team.

 

 

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