How Long Strata Owners Have to Claim from the Owners Corporation for Common Property Defects in NSW

Introduction

Understanding the time limits for making claims about common property defects is crucial for anyone involved in strata living in New South Wales. Changes to the Strata Schemes Management Act 2015 (NSW) introduced in 2025 have extended the period for lot owners to bring claims for damages, giving both strata owners and owners corporations more clarity and time to address building issues.

These reforms are significant because common property defects can have lasting impacts on property value and quality of life. Knowing your rights and obligations under the updated law helps ensure that strata stakeholders act promptly and protect their interests.

Interactive Tool: Calculate Your Common Property Defects Claim Deadline in NSW

Six-Year Time Limit for Strata Defect Claims

The New Rule: A Six-Year Window After 1 July 2025

Following the introduction of the Strata Schemes Legislation Amendment Act 2025 (NSW), a significant change has been made to the time limit for strata defect claims. Specifically, from 1 July 2025, lot owners now have six years to commence legal proceedings against an owners corporation for a breach of its duty to maintain and repair common property.

This extension is outlined in the amended Section 106(6) of the Strata Schemes Management Act 2015 (NSW).

Moreover, the legislation specifies that a lot owner cannot bring an action for damages more than six years after becoming aware of the loss.

As a result, this change provides strata owners with a more realistic timeframe to pursue their rights.

The Previous Rule: A Two-Year Window to Act

To understand the importance of this reform, it is essential to consider the previous rule.

Prior to 1 July 2025, Section 106(6) of the Strata Schemes Management Act 2015 (NSW) imposed a much shorter limitation period on lot owners.

Under the old law:

• A strata owner was required to bring an action for damages within two years of first becoming aware of the loss.
• This two-year window placed considerable pressure on lot owners to act quickly, which was often challenging when dealing with complex building defects.
• The limited timeframe could prevent owners from being able to claim for losses resulting from a breach of the owners corporation’s statutory duties.

Why the Limitation Period for Strata Claims Was Extended in 2025

The extension of the limitation period from two to six years was a crucial reform because many common property defects are not immediately obvious, making the process of resolving strata building defects & disputes a complex challenge. Issues such as water ingress can develop slowly over a long period, and the resulting damage may only be discovered long after the defect first appeared.

For instance:

• A lot owner might notice damp patches on a wall in 2024.
• The source of the leak may not be confirmed by an expert until 2026.

Under the previous two-year rule, the owner would have had to commence proceedings by 2026. With the new six-year period, they now have until 2030, allowing more time to investigate the defect and prepare a claim.

When Does Six-Year Period Begin?

Understanding the “Awareness of Loss” Principle

The six-year time limit for a strata owner to make a claim does not begin when a defect first appears. Instead, the clock starts ticking from the moment the owner first becomes aware of the loss, as stipulated by subsection 106(6) of the Strata Schemes Management Act 2015 (NSW). This critical starting point was clarified by the New South Wales Court of Appeal in the case of The Owners – Strata Plan No 74232 v Tezel [2023] NSWCA 35.

The court determined that becoming “aware of the loss” refers to the point when the lot owner recognises the kind or type of loss they have suffered. This does not mean the owner needs to know the full financial extent of the loss or its specific details.

For example:

• Awareness begins when you realise you are losing rental income due to a defect, which starts the process of recovering loss of rent due to common property defects, not when you have calculated the exact amount of lost rent over several months.
• This principle is designed to benefit the lot owner, particularly in situations involving hidden or latent defects.

The limitation period is tied to the owner’s discovery of the loss, not the underlying breach by the owners corporation, which may have occurred much earlier.

Distinguishing Between Awareness of the Defect & Awareness of the Loss

A common point of confusion is the difference between noticing a defect and becoming aware of the resulting loss. The law makes a clear distinction: the time limit is linked to the awareness of the loss (the effect), not the initial discovery of the defect (the cause).

• The defect is the owners corporation’s failure to maintain common property.
• The loss is the consequence, such as property damage, financial costs, or an inability to rent the unit.

The The Owners – Strata Plan No 74232 v Tezel [2023] NSWCA 35 case provides a clear illustration of this principle. The lot owner first observed water leaks—the defect—in her unit in 2013. However, the specific loss of rental income did not occur until 2016, when she was unable to find a tenant for the property.

The court established that the limitation period for claiming lost rent began in 2016, the year she first became aware of that particular type of loss. This distinction ensures that the time limit for a strata claim is not unfairly triggered before a tangible loss has even occurred.

NSW Strata Case Study: The Owners v Tezel

The Factual Background: Water Damage & Lost Rental Income

The case of The Owners – Strata Plan No 74232 v Tezel [2023] NSWCA 35 provides a clear example of how the limitation period works in a strata context.

Key events unfolded as follows:

• 2013: water leaks emerge in Ms Tezel’s Bondi Beach apartment after heavy rain.
• 2016: she attempts to rent the property but fails due to its condition.
• 6 November 2020: Ms Tezel files a claim at the New South Wales Civil and Administrative Tribunal (NCAT), seeking compensation for lost rental income dating from 6 November 2018.

Legal Principle 1: The Time Limit Starts When You First Know the Type of Loss

A central issue in the The Owners – Strata Plan No 74232 v Tezel [2023] NSWCA 35 case was determining the exact starting point for the limitation period. The NSW Court of Appeal clarified that the clock starts when the lot owner first becomes aware of the loss.

Crucially, this refers to the moment the owner recognises the kind or type of loss, not when they know its full financial extent or the specific period being claimed.

In Ms Tezel’s situation, the court found she first became aware of the inability to earn rental income in 2016 when she tried and failed to lease the unit.

Therefore, her claim—filed in 2020 for losses beginning in 2018—was ruled filed too late, since the two-year limitation period had commenced four years earlier.

Legal Principle 2: A Continuing Defect Does Not Reset the Time Limit

The The Owners – Strata Plan No 74232 v Tezel [2023] NSWCA 35 case also established another critical legal principle for strata owners: an ongoing failure by an owners corporation to repair a common property defect does not restart the limitation period each day.

Two key points emerged:

• Continuous breach: a persistent defect does not trigger a new limitation period every day it continues.
• Fixed start date: the limitation clock begins only once, at the moment the loss is first identified.

For Ms Tezel, her awareness of the loss of rent began in 2016, and that single event set the start of the limitation period, regardless of the defect’s ongoing nature.

What the Six-Year Limitation Period Means for Strata Stakeholders

For Strata Lot Owners: More Time to Prepare but No Time to Waste

The extension of the limitation period to six years provides lot owners with more breathing space to address common property defects. Furthermore, this longer timeframe allows for a more thorough approach to building a claim without the intense pressure of a two-year deadline.

With this additional time, lot owners can:

• Gather comprehensive evidence, including photos and correspondence.
• Obtain detailed quotes for rectification works.
• Seek expert legal advice to understand your rights and options.

Despite the extended window, it is crucial not to delay unnecessarily. Acting promptly helps prevent further damage to your property and increases the likelihood of achieving a cost-effective and timely resolution with your strata scheme.

For Owners Corporations: Increased Exposure & the Need for Proactive Management

For owners corporations, the six-year limitation period creates a longer tail of liability, thereby increasing their exposure to potential claims from lot owners. Consequently, this change underscores the importance of proactive management and diligent maintenance of common property.

To mitigate this increased risk, owners corporations should focus on several key areas:

• Proactive Maintenance: Investigating and repairing defects promptly is more critical than ever to prevent minor issues from escalating into significant and costly claims.
• Diligent Record-Keeping: Committee minutes, maintenance logs, and all correspondence related to repairs should be preserved for longer periods to effectively defend against future claims.
• Insurance Review: It is essential to review strata insurance arrangements to ensure that coverage is adequate for the extended liability periods.

Building a Strong Strata Defect Claim Within the Time Limit

The Critical Role of Early Factual Investigation

Undertaking a thorough factual investigation as soon as you identify a loss is essential for determining the precise start date of the six-year limitation period. The main goal is to establish the exact moment you, as the lot owner, first became aware of the loss resulting from the owners corporation’s failure to maintain common property.

This investigation not only helps confirm the last possible date for lodging a claim against your strata’s owners corporation, but also ensures your claim is filed within the legal timeframe stipulated by the Strata Schemes Management Act 2015 (NSW).

Gathering Your Evidence for Court or NCAT

Cases brought before a court or those handled as a strata dispute in NCAT are decided based on the evidence presented. Therefore, great care is required to gather all necessary proof to establish the facts of your claim and the reasonably foreseeable loss you have suffered.

To effectively prove your claim, you will need to provide various forms of evidence, which may include:

• Correspondence: Emails, letters, and any other written communication with the owners corporation or strata manager regarding the defect.
• Photographs and Videos: Visual documentation of the defect and the resulting damage to your property over time.
• Expert Reports: Assessments from qualified professionals, such as building consultants or engineers, detailing the cause and extent of the defect.
• Witness Statements: Testimony from individuals who can verify the timeline of events and the impact of the defect.

It is also important to understand the distinction between evidence from a lay witness, who can speak to factual events they observed, and an expert witness, who can provide a professional opinion on technical matters.

Why You Must Seek Prompt Legal Advice for a Strata Claim

Even with the extended six-year limitation period, strata disputes remain complex legal matters. Obtaining timely legal advice from experienced NSW strata lawyers is crucial for understanding your rights and effectively navigating the claims process.

If you are a lot owner who has suffered a loss due to common property defects, seeking legal guidance early is highly recommended. A legal professional can assist in:

• Preparing your case to ensure all necessary documentation and evidence are in order.
• Attempting to resolve the dispute efficiently, potentially avoiding lengthy litigation.
• Ensuring you achieve the best possible outcome by taking the correct steps from the outset.

Do not delay, as prompt action is key to a successful strata claim.

Conclusion

Understanding the six-year time limit for strata defect claims in NSW is crucial, with the clock starting only when a lot owner first becomes aware of the loss. This legislative change gives owners more time to act, but building a strong, evidence-based case remains fundamental to a successful outcome.

If you have suffered a loss due to your owners corporation’s failure to maintain common property, navigating the claims process requires specialised legal knowledge. For trusted expertise tailored to your needs, contact the strata defect lawyers at PBL Law Group in Sydney to secure the best possible outcome for your case. Owners corporations seeking guidance on their statutory duties and proactive management can also consult PBL Law Group’s owners corporations strata lawyers for comprehensive legal support.

Frequently Asked Questions