The past months have seen the construction industry face heavy criticism as a deluge of problems affecting apartment buildings across Australia begin to surface. Construction issues range from superficial cracking to major structural defects threatening the very stability of the building, and the use of combustible materials putting lives at risk.
All industry players are impacted with the question of blame bouncing between architects, engineers, certifiers, developers and builders. In the meantime, hundreds of unit owners, investors and renters face uncertainty and many occupants are still unable to live in their units as the stability and safety of their buildings are scrutinised.
Strata defects can have an overwhelming financial and emotional impact on a unit owner. If you have recently purchased a new or near-new apartment or townhouse in a strata complex only to find construction defects or poor-quality work, you will no doubt feel devastated and frustrated.
If you believe your strata unit or the common areas in your strata building have defective building work, you should act quickly. Knowing your rights and the relevant time limitations in pursuing a claim for defective work will empower you to take the appropriate steps to have the work rectified.
Implied warranties for building work
As with all residential building work, a newly-built strata unit comes with various implied statutory warranties, even if these are not stated in the building contract.
These warranties not only apply between the builder / developer and original owner but, subject to time limitations, may pass onto subsequent owners. They cannot be avoided by contrary provisions in a building contract.
The Home Building Act 1989 (NSW) implies specific warranties into every contract for residential building work, namely:
- that the work will be completed with due care and skill and in accordance with any plans and specifications provided in the contract;
- that all materials supplied will be good and suitable for the purpose for which they are used and, unless otherwise stated, will be new;
- that the work will be done in compliance and accordance with applicable laws;
- that the work will be done with due diligence and within the time set out in the contract and, if no time is stipulated, within a reasonable time;
- if the work is the construction of a dwelling or comprises alterations, additions, repairs or renovations to a dwelling, the work will result in the dwelling being reasonably fit for occupation as a dwelling;
- that the work and materials used to do the work will be reasonable for the specified purpose or result.
What is a building defect?
It is important to distinguish between major defects and minor defects as the warranty period differs between each.
Major defects are covered by a six-year warranty and other ‘general’ defects (those not classified as a major defect) have a two-year warranty period.
A major defect is defined as:
- a major element of a building (such as a fire safety system, waterproofing or structures critical to the building’s stability such as foundations, footings, walls, roofs, beams or columns) which causes or is likely to cause all or part of the building to be uninhabitable or unable to be used for its intended purpose, or which threatens or is likely to cause the collapse or destruction of the building as a whole, or part of it.
Responsibilities for repairing defects
The holder of the contractor licence (or person required to hold a contractor licence) under the building contract is the party responsible to repair any defects. Generally, this will be the developer or builder of the project.
The statutory warranties extend to defective work that has been undertaken by a subcontractor on behalf of a principal contractor. For example, if the defective work concerns tiling that was carried out by a subcontractor of the principal builder, then the principal builder remains responsible to the property owner for the defective work (however they will in turn rely on the warranty between the principal and tiler).
Defects in a strata scheme
Defective work in a strata complex may relate to the unit itself and / or the common area.
Identifying and acting on defects and potential defects before they escalate is essential to ensure that action can be taken within the warranty limitation periods.
The owners corporation is responsible for alerting a developer or builder to defects concerning the common property and for arranging repairs and maintenance. This involves requesting maintenance schedules, manuals and warranty documents for various facilities and equipment, carrying out regular maintenance activities, prioritising defects and agreeing on and appointing an expert to carry out defect inspections.
Strata owners should stay informed regarding the management of common property and the progress of any defective work claims by attending regular strata meetings.
The longer time goes on, the more difficult it is to distinguish whether a building issue is a true defect or stems from poor maintenance and / or wear and tear. Indeed, the latter may well be argued by a developer should proceedings become necessary.
It is unlikely that a construction project will ever be completed without at least some minor defects, many of which will not be apparent until after practical completion. A reasonable approach and good communication skills generally assist in having defective work issues resolved. In a strata scheme, this is particularly important as the committee will need to coordinate and appoint a strata manager to be the ‘voice’ for all lot owners.
Unfortunately, defects are not always agreed and / or rectified in a reasonable and practical manner and disputes can become heated. If you experience problems negotiating to have defective work fixed or a developer / contractor denies liability for the defects, there are various avenues you can take.
Mediation provides an alternative to expensive and time-consuming litigation and can achieve good results before problems escalate. An experienced property lawyer will explain your rights and guide you through the relevant process.
If your dispute cannot be resolved, it is important to obtain legal advice quickly to avoid expiration of the relevant time limits.