Defects must be dealt with
by David Glinatsis
Defects are expected in all new buildings with recent evidence indicating that there is a high rate of defects in new strata buildings in NSW. For this reason, it is important that Strata Managers know how to deal with defects as they arise.
According to a study undertaken by the City Futures Research Centre at UNSW:*
- Almost two thirds of respondents who own a property built since 1997 reported ongoing defects in the building in which they own a lot. The most common defects related to water ingress.
- Almost half of respondents who own a property run by a Strata Manager are dissatisfied with the way their Strata Manager treats major repairs and maintenance issues. The most common complaint was that Strata Managers did not provide the Executive Committee and/or the Owners with sufficient information.
- Of respondents dissatisfied with their Owners Corporation, the most common concern in the treatment of major repairs and maintenance issues was the amount of time taken to reach agreement.
Some of the more common building defects include:
- Internal water leaks;
- Poor fire and safety compliance;
- Defective balcony or balustrade design;
- Defective services (e.g. broken lifts or air conditioning units);
- Building movements;
- Paint and rendering;
- Electrical faults;
- Tiling problems; and
- Defects caused by inappropriate building materials.
Recurring Defect Problems
Some of the recurring problems in relation to strata defect claims include:
- Claims which are out of time;
- Poor expert reports;
- Owners Corporations not following the correct processes;
- Owners Corporations not choosing the right team;
- That the developer and/or builder still hold control of the scheme which delays the rectification of defects;
- The builder is no longer in business and therefore unable to remedy the defects;
- An incompetent or deadlocked Executive Committee; and
- Delays in the settlement of Home Warranty Insurance Claims.
It is important to recognise that defect claims require the effective management of a number of stakeholders as well as the effective management of legal and technical issues.
Download a printable version of this defects newsletter here.
Kreisson Legal regularly acts on behalf of Owners Corporations, Strata Managers and Strata Plans in relation to defect claims. We are well experienced in the complexities of dealing with multi party claims against Builders and Developers and in claims against Home Owners Warranty Insurers under the Home Building Act 1989.
Our Services to Owners Corporations include:
- Attending Owners Corporation and Executive Committee meetings to advise and address questions from Lot Owners and Executive Committee members;
- Providing regular advice to the responsible Strata Manager to ensure that the Strata Manager is informed and empowered to obtain instructions from the Executive Committee or the Strata Plan;
- Preparation of Home Owners Insurance claims for submission to the Home Owners Warranty Insurer;
- Appointing, briefing and liaising with the technical experts retained on behalf of the Owners Corporation;
- Preparation of detailed Points of Claim for commencement of legal proceedings, instructing Counsel and attending the CTTT or Court as required;
- Preparation of all evidence for use in proceedings;
- Attending settlement negotiations with the Builder/Developer and Home Owners Warranty Insurer where required;
- Cost reporting and regular updates;
- Negotiating with the HOW Insurer in relation to claims for defective and/or incomplete work;
- Drafting, reviewing and advising on contracts and tender documents for any building and/or rectification work;
- Advising on construction contract administration, including breach of contract, extension of time, liquidated damages and payment disputes; and
- Responding to Building and Construction Industry Security of Payment Act claims within the 10 business day time limit.
We can provide training to Strata Managers to assist them in the development of knowledge and understanding of issues relevant to their role. Our workshops are practical and in plain English. They provide a comprehensive update for Strata Managers, covering some of the essential issues that need to be addressed when making successful defect claims.
If you would like any further information on this topic, please contact:
+61 2 8239 6502