Building defects — faults that have existed since construction or are triggered later on by faulty original construction — are widespread problem. They can impact on the quality and liveability of both private and common areas; affect property values and rental incomes; and can result in ongoing damage to the building.
Defects can result from inadequate workmanship going unnoticed and/or the quality of component parts of the building: building component manufacturers provide their own certifications and don’t always clarify limitations on application and capacity.
After discovery
Owners can sometimes face many difficulties in having defects fixed once they are discovered. Strata scheme operating costs can increase to cover emergency and other repairs, investigations and legal actions; owners, committees and managers are distracted from usual management when dealing with defects; and conflicts can arise between owners, committees, managers, developers and others over how to deal with defects.
Challenges for strata owners
It is also much more difficult for strata owners to get defects fixed than it is for owners detached houses. In part, this is because:
- Strata schemes are made up of multiple owners, which can lead to delays in discovering defects, deciding on the best (technical and legal) solution, making decisions and implementing actions.
- The contract to build the strata scheme is between the developer and builder. The owners corporation is not a party to it and cannot use it to get the builder to rectify the problems. Instead, strata schemes have to rely on statutory rights or negligence claims.
- Home Warranty Insurance is no longer compulsory for the construction of buildings over 3 stories.
Because defects in buildings can worsen and cause further problems, they should be addressed as promptly as possible. If there is not sufficient money in the sinking fund to cover immediate repairs, a special levy may have to be imposed.
Out of time claims
Strata schemes need to be diligent as timeframes are being strictly applied across all jurisdictions. Act quickly should a claim be required and commence action early, don’t wait for the end of any statutory or common law time periods. Otherwise you may run out of time for any claim and be required to redo substandard work. Obtain professional advice if necessary.
Common areas, common problems
In Australia there is a statutory obligation to maintain and repair common areas, namely ‘things’ that are used by more than one person or are in the common areas of the building/complex. The most common problems in the strata industry when dealing with construction and remedial works defects include:
• Not reading or understanding the contract
• Out of time claims
• Poor expert reports
• Not following process
• Picking the wrong team
• Not reading or understanding the contract.
Strata schemes must ensure that any work required to repair common areas is properly scoped (‘fix pipe’ is not a scope of works), clearly defined and undertaken by licensed contractors, not general contractors. Ensure the contractor has the proper licence, insurance and expertise to carry out the works.
Also have any major works independently reviewed by a lawyer/consultant for accuracy and the works certified upon completion. By not doing this, you may find variations exceeding the original quote and the scope undertaken not adequately fixing the problems.
Poor Expert Reports
Strata schemes need to be careful in obtaining ‘expert reports’ and must ensure the correct expert is chosen and fully briefed of the relevant defect so the report can outline any breaches and determine the correct course of action.
Ask yourself, ‘Will this expert appear in court or provide court compliant reports should it get that far?’ Poor reports are useless and will no doubt need to be redone costing you valuable time and money… and you could run out of time to place a claim.
Not following the process
All contracts and legislation require a process to be followed for a reason. Strata schemes must document everything to ensure contracts are completed properly and deal with any defects using the correct procedure (for example, notifications) in a timely manner. If not, claims may be dismissed, evidence in proceedings may not be accepted and negligence may come back to those who didn’t follow the correct procedure.
Choosing the wrong team
This is potentially the most damaging of all. If the wrong team is involved the entire process may need to be done, claims may be dismissed and/or claims made against the people involved for the strata scheme. Don’t settle for cheap quotes and always ensure your chosen team:
• has the proper expertise to give advice, for example structural engineers advise on structural issues and lawyers provide legal advice.
• has done this work before – not all experts, consultants and lawyers are the same and whilst they may sound good on paper, may not have the experience you seek.
• your experts are properly licensed and have adequate insurance (including professional indemnity).
• has the will to perform with a practical approach to solving issues.
The resolution
The key to avoiding strata defect disasters is having a knowledgeable strata manager and committed executive committee. It also helps to:
• obtain proper advice at the very beginning and remember that lawyers and consultants can be engaged in bite sized chunks.
• fully brief expert/consultants… accurately,
• ensure your experts/consultants will be available for court if needed,
• only get advice on legal matters from legal professionals,
• have regular meetings to stay informed,
• keep a running cost analysis on where the matter is at and how much has been spent,
• keep the matter moving forward – drive over the opposition; and
• be commercial and settle when you can.