Dealing with Mould Issues in Strata Properties: Responsibilities and Financial Compensation in NSW

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Mould problems within buildings are increasingly prevalent in New South Wales, posing a significant and growing concern for lot owners. These issues not only jeopardise the structural integrity of properties but also have detrimental effects on the health and financial well-being of those affected. The rise in mould-related incidents in the last few years has brought forth a pressing need for lot owners to understand their rights and take appropriate action. In this article, we explore what lot owners can do when faced with mould issues, who should be held responsible, and how they can recover financial losses arising from the problem. Drawing on a recent case won by PBL Law Group in the Supreme Court of New South Wales, we delve into the legal aspects of addressing mould in strata properties.

Table of Contents

Background to the case

In the case of Byrne v Strata Plan [2021] NSWSC 342, our client, Robert John Byrne, sought compensation for water damage, mould, and related illnesses resulting from the Owners Corporation’s failure to fulfil obligations to undertake building works to remediate the mould, fungal spores, bacteria and the like. Specifically, the Owners Corporation agreed to mould remediation under their obligation to maintain the common property, but had failed to do since the settlement, being a period of three years before our client sought PBL Law Group’s legal assistance. The Court ruled in favour of our client, highlighting the Owner’s Corporation’s responsibility to address mould-related issues under the Settlement Deed and compensation for lost rental income our client could have earned if not for the water damage and mould problems.

Who is Responsible for mould issues and rectification in apartments in NSW?

When it comes to mould issues in apartments, understanding who is responsible and liable is crucial for addressing the problem and seeking appropriate remedies.

1. Owners Corporation and Common Property

Lot owners residing in strata properties rely on strata committees of Owners Corporations to maintain and manage the common property. When mould issues arise as a result of common property failures, such as inadequate membranes or ventilation, the Owners Corporation may be held responsible. Common property refers to areas shared by all lot owners, such as hallways, stairwells, roofs, and exterior walls however mould originating from common property may affect an adjacent strata apartment. In those instances, Lot owners may be able to claim for compensation and remediation costs from the Owners Corporation for problems caused to their strata apartment that originated from common property. It is essential for lot owners to promptly notify their owners corporation when they observe mould problems in common areas so that necessary actions can be taken to address the issue and prevent any airborne mould and mould spore from spreading.

2. Lifestyle and Ventilation

Mould problems can also be attributed to lifestyle factors unrelated to common property maintenance. For instance, excessive moisture and condensation from activities like cooking, showering, or drying clothes indoors can contribute to mould growth in carpets and ceilings. Additionally, inadequate ventilation that does not allow water to evaporate resulting from restrictive building requirements ( limited airflow due to energy efficiency measures) may exacerbate mould problems. Determining liability for mould issues related to lifestyle and ventilation factors can be complex, as it requires evaluating the specific circumstances and potential contributions from multiple parties. Regardless, expert assessment is crucial in determining liability. Factors they consider include the impact of lifestyle choices and ventilation conditions on mould growth. They also analyse factors such as the apartment’s layout, the effectiveness of ventilation systems, and the correlation between occupants’ activities and mould development. Their expertise allows for a comprehensive understanding of the situation and aids in identifying any party, including occupants, owners corporations, or even builders, who may share responsibility for the mould problem.

3. Builder and Developer Liability

Builders and developers can potentially be held liable for water ingress and subsequent mould issues that arise from design or construction defects. As part of consumer protection measures, homeowners are safeguarded by statutory warranties that place certain obligations on builders. These warranties require builders to deliver work of good quality, utilise high-quality materials, complete projects within the agreed-upon timeframes, and adhere to approved plans and specifications (read our comprehensive guide on statutory warranties under the NSW Home Building Act here) Such warranties serve as a legal recourse for homeowners in cases where defects in the construction process lead to mould problems. It is crucial for homeowners to familiarise themselves with their rights under these warranties and seek advice from legal professionals to determine the most appropriate course of action for pursuing compensation from builders or developers for damages resulting from mould-related building defects. By understanding their legal entitlements, homeowners can take the necessary steps to protect their interests and hold accountable those responsible for the mould problems in their properties.

Loss of Rental Income

Lot owners who experience a loss of rental income as a direct result of mould-related issues caused by the Owners Corporation’s breach of obligations to repair and maintain the common property may have grounds for seeking compensation. When determining the amount of lost rent, the Court calculated the start date to be the date which an expert appointed by the Owners Corporation had identified that the remediation work had not been carried out by the Owners Corporation as required under the settlement deed. This period continues until the problem is adequately resolved. It is essential to gather evidence of the rental value of the property during this timeframe, such as rental agreements, market research, or expert opinions, to support the claim for lost rental income. You can read our comprehensive guide on recovering loss of rent due to common property defects here. Additionally, any accrued interest on the unpaid rent may also be included in the compensation sought which was also the case in our client’s situation.

Property Damage and Expenses:

Lot owners are entitled to claim compensation for damages incurred to their fixtures, fittings, and personal property as a direct result of mould problems originating from common property. This includes any structural elements or belongings that have been adversely affected by mould growth. To substantiate these claims, it is important to document the damage thoroughly, preferably through photographs or videos, and gather any relevant receipts or invoices for repairs or replacements. Lot owners can also seek compensation for expenses related to remediation efforts, such as professional cleaning services, mould testing, and necessary repairs. These expenses should be properly documented and supported by invoices and receipts to strengthen the claim for compensation.

Preventing and Addressing Mould Issues in your Strata Apartment

To mitigate the risks associated with mould in strata properties, the following steps are recommended:

1. Prompt Reporting

It is crucial to report any signs of mould or water damage to the Owners Corporation as soon as they are noticed, especially if they are caused by common property failures. Prompt reporting allows for timely action to be taken, minimizing the potential health risks and further damage. Lot owners should document the mould or water damage with photographs and written descriptions, providing clear evidence of the issue. By promptly reporting the problem to the Owners Corporation, they can fulfil their obligation to notify the responsible party and ensure that appropriate measures are taken to address the mould problem. Timely reporting also helps in establishing a timeline of events, which may be important in legal proceedings.

2. Remedial Measures

Taking immediate action to address the mould problem is crucial for preventing further damage and mitigating health risks. Once the cause of the mould growth has been identified, such as a building or plumbing defect, it is essential to engage qualified professionals to rectify the underlying issue. Depending on the nature of the problem, this may involve repairs, replacements, or the implementation of proper ventilation and moisture control measures. Lot owners should collaborate with the Owners Corporation and engage reputable contractors or specialists experienced in mould remediation to ensure that the problem is addressed effectively and in compliance with industry standards. Taking prompt and appropriate remedial measures not only protects the occupants’ health but also helps prevent the escalation of the mould problem and potential legal disputes.

3. Expert Assessments

Obtaining expert reports from qualified professionals is crucial in documenting the extent of the mould problem and evaluating its potential health risks. These experts can assess the property thoroughly, conducting tests and examinations to determine the type and severity of mould growth, as well as identify any underlying causes or contributing factors. Their assessments provide valuable evidence that can support legal claims or discussions with the Owners Corporation. Expert reports help establish the necessary link between the mould problem and its impact on the health and well-being of the occupants. Additionally, these reports can aid in determining the appropriate remediation measures required to eliminate the mould and prevent its recurrence. By engaging reputable experts, lot owners can ensure that the assessments are conducted professionally and that the findings can be relied upon to support the lot owner’s position in seeking compensation or resolution for the mould-related issues.


Mould issues in strata properties can result in significant financial losses and health risks for lot owners. Understanding responsibilities, seeking legal advice, and taking prompt action are crucial steps towards recovering financial losses and ensuring a safe living environment. By staying informed and proactive, lot owners can navigate the complexities of mould-related challenges and protect their rights within the legal framework.

If you are experiencing mould issues in your strata title apartment, our team at PBL Law Group can provide the expert assistance you need. Our expert strata and construction lawyers specialise in handling such cases and can offer guidance and representation tailored to your situation. From assessing your claim to providing legal advice and pursuing remedies for mould-related issues, we are committed to protecting your rights and your property.



Authored by
Director Lawyer

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Raea Khan Circle
Director Lawyer
Raea Khan

Raea is Managing Director and Principal Lawyer for PBl Law Group. Raea assists clients with major projects, property developments, construction and strata law.

He has worked in Western Australia and Queensland assisting with expansion projects in the energy and resource sector and now predominately advises clients in Strata and Community Association matters.

He is a member of the Australian College of Strata Lawyers where majority of his work is advising developers and owners corporations with dispute related minor and major defects, strata governance and common property litigation. He is proficient at leading negotiations and meetings.

Raea has a particular interest in the commercial aspect of any dispute and always tries to weigh up the risk, reward and benefit of legal proceedings at each different stage.

Raea enjoys all forms of competitive sport, including Crossfit and actively participates in Triathlons, representing Australia as an age group athlete. He was a member of Red Head Surf Lifesaving club.

  • Strata Law
  • Construction & Major Projects
  • Commercial and Business Law
  • Planning & Environment Law