Lot Owners can Recover Losses as a Result of the Owners Corporation’s Failure to Maintain the Common Property


Watson & Watson commercial litigation Solicitors, in particular in relation to building defects, building disputes and building issues are experienced and can provide you with cost efficient advice.

Since the introduction of the Strata Schemes Management Act 2015 in December 2016 it is now much simpler and easier to recover reasonably foreseeable losses suffered by an Owner of a unit as a result of the contravention of the obligations of the Owners Corporation to properly maintain and keep the common property and any personal property invested in the Owners Corporation in a good and serviceable repair.

Often we receive calls and enquiries from individual Owners who have suffered as a result of the Owners Corporation’s neglect in maintaining the common property.  Those Lot Owners usually suffer losses. Those losses include such things as damage to the Owner’s property fixtures, fittings, furnishings.  In many cases those Owners are unable to continue to reside in their units due to the damage to the unit.  In particular there are issues where the Owners Corporation fail to rectify in a timely manner defects in common property which allows water ingress to a unit.  This often has significant long term consequences such as mould and damage.

In the past before the current Act came into force Lot Owners negotiated or attempted to have issues resolved with the Owners Corporation for long periods of time sometimes for years while their units deteriorated.  It is not uncommon that some Owners suffered health issues and loss of an ability to occupy the property either needing to move elsewhere or suffering loss of rent.  This continues today.

In the past the NSW Civil and Administrative Tribunal (NCAT) had no power at all to deal with the issues as to losses suffered by the Lot Owners due to the failures of the Owners Corporation to properly maintain the property.

The only remedy available through NCAT was to obtain an Order that the Owners Corporation properly maintain the common property and rectify the defects.  Lot Owners have to identify the defects, the rectification method and costs and bring costly litigation with the only remedy being an Order that the Owners Corporation would be ordered to rectify the defects which have been identified.

There was no compensation available to the Lot Owners through the process at NCAT for reimbursement of their own losses.  There were arguments that other Courts for example the Supreme Court in New South Wales may have power to order the Owners Corporation to pay compensation for losses, however in almost all cases once a Lot Owner had gone through the NCAT procedure to obtain the only remedy available, namely the order that the Owners Corporation rectify the works, those Owners then did not wish to go through a whole process in a different Court seeking damages which would not be fully recoverable.  Often damages were insignificant compared with the cost of the litigation in the Supreme Court.

Now there is a specific right under the new Act that an Owner may recover from the Owners Corporation for any reasonably foreseeable loss suffered by the Owner as a result of the contravention of the Owners Corporation of its obligation to maintain and keep the common property in good and serviceable repair.

However an Owner cannot bring an action under the Act for breach of statutory duty more than 2 years after the Owner first becomes aware of the loss.

There is need to communicate with the Owners Corporation in a strong and meaningful way as early as possible to ensure that you are in a position to commence the proceedings with the appropriate evidence as soon as possible and within the limitation period.

We recommend that appropriate steps be taken to properly identify the defects, identify that the defects are as a result of the Owners Corporation’s failure to properly maintain the common property and which particular elements of the common property, identify the defects, identify the rectification works required and to put the Owners Corporation on notice that action will be taken if the Owners Corporation does not undertake their responsibility to maintain the common property.  We assist many Owners by the appointment of an appropriate expert to review the works and prepare the necessary reports to put the Owners Corporation on notice and if necessary to commence proceedings out of NCAT.

Having regard to the much improved remedies available to the Lot Owner or Unit Owner who has been wronged by the Owners Corporation it is now time to seek our advice as to what steps can and should be taken to protect your interest.

Many Owners Corporations and Strata Managers are still slow to react, however we believe that with our assistance you will be able to achieve not only rectification of the defective work but also recovery of reasonably foreseeable losses.

If you have any concerns please contract Richard Watson, experienced building and construction Lawyer or his Personal Assistant Shereen DaGloria to discuss this important issue.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 02 9221 6011.

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