NSW Strata Reform: 6-Year Limit on Common Property Damage Claims

Introduction

The 2025 strata reform in New South Wales has extended the limitation period for strata owners to bring damages claims against an owners corporation for failure to repair and maintain common property from 2 years to 6 years under section 106 of the Strata Schemes Management Act 2015 (NSW). This change gives lot owners in a strata scheme a more practical timeframe to address losses arising from breaches of the owners corporation’s statutory duty.

Understanding the updated limitation period is essential for strata owners and owners corporations alike, as it directly affects rights and obligations under NSW strata law. Consulting a strata lawyer remains crucial to ensure claims are properly prepared and lodged within the required timeframe, helping to protect your interests under the strata schemes legislation.

Strata Reform: Extending the Damages Claim Limitation Period

The Previous Two-Year Limitation Period

To appreciate the significance of the strata reform, it is important to understand the previous rule. Prior to the changes, Section 106(6) of the Strata Schemes Management Act 2015 (NSW) imposed a much shorter timeframe for a lot owner to pursue damages claims.

Under the old legislation, a strata owner in NSW was required to act quickly when seeking compensation from the owners corporation. The previous two-year limitation period had several key features:

• An action for damages had to be commenced within two years of the lot owner first becoming aware of the loss.
• This brief window placed considerable pressure on strata owners, which was often difficult when dealing with complex or slowly developing common property defects.
• The limited timeframe could prevent a lot owner from being able to claim for losses that resulted from a breach of the owners corporation’s duty to repair and maintain common property.

The Current Six-Year Limitation Period for Strata Owners

A significant change introduced by the Strata Schemes Legislation Amendment Act 2025 (NSW) is the extension of the time limit for a lot owner to make a claim. Effective from 1 July 2025, strata owners now have six years to commence legal proceedings against an owners corporation for a breach of its duty under Section 106 of the Strata Schemes Management Act 2015 (NSW).

This extension from 2 years to 6 years provides strata owners with a more realistic timeframe to pursue their rights for damages. The reform strengthens the rights of lot owners and encourages an owners corporation—which may need legal advice for an owners corporation to navigate its duties—to address repair requests promptly to limit its exposure to potentially larger damages claims over a longer period.

When the 6-Year Limitation Period Begins

Understanding the Principle of Awareness of Loss

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 from the moment the lot owner first becomes aware of the loss, as specified in 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.

It is important to note that the owner does not need to know the full financial extent of the loss or its specific details for the limitation period to commence. For example, awareness begins when you realise you are losing rental income due to a defect, not when you have calculated the exact amount of lost rent over several months.

This principle is tied to the owner’s discovery of the loss, not the underlying breach by the owners corporation, which may have occurred much earlier. This approach particularly benefits a lot owner in situations involving hidden or latent defects.

Awareness of a Defect vs. Awareness of a Loss

A common point of confusion is the distinction between noticing a defect and becoming aware of the resulting loss. The law makes a clear distinction, linking the time limit 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 repair and maintain common property, while the loss is the consequence of that failure.

Losses can manifest in various forms, including:

• Damage to the lot or a lot owner’s personal property
• Financial costs incurred by the owner
• An inability to rent the unit, resulting in lost income

The The Owners – Strata Plan No 74232 v Tezel 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.

Key Legal Principles from The Owners v Tezel Case

Time Limit Starts with Awareness of Loss Type

The NSW Court of Appeal case, The Owners – Strata Plan No 74232 v Tezel, clarified that the limitation period begins on awareness of the ‘kind or type’ of loss, not on full knowledge of its dollar value. This awareness is therefore independent of the eventual financial calculation.

The timeline in Ms Tezel’s circumstances unfolded as follows:

• 2013 – water leaks appeared in her apartment, revealing an underlying defect.
• 2016 – loss of rent identified when she tried to lease the unit and discovered it was untenantable.

This distinction is crucial for any lot owner in a strata scheme because the clock starts ticking when you recognise the consequence of the defect, such as lost rent, rather than when you first spot the physical problem.

Why a Continuing Defect Does Not Reset the Time Limit

A significant principle confirmed in The Owners – Strata Plan No 74232 v Tezel is that an owners corporation’s ongoing failure to repair common property does not restart the limitation period. Daily persistence of the defect does not create a fresh claim window.

The practical effect for owners is clear:

• In Ms Tezel’s case, awareness of lost rent in 2016 triggered the limitation period for that loss.
• The continuing defect after 2016 did not restart the clock, so the start date remained fixed at the moment the loss was first identified.

What the Six-Year Limitation Period Means for Strata Stakeholders

For Strata Lot Owners: More Time to Prepare Your Claim

The extension of the limitation period to six years provides a lot owner with more flexibility and breathing space to address common property defects. This longer timeframe removes the intense pressure of the previous two-year deadline, allowing for a more thorough approach to building a damages claim.

With this additional time, a lot owner in a strata scheme can:

• Gather comprehensive evidence, such as photographs of the damage, expert reports, and all correspondence with the owners corporation or strata manager.
• Obtain detailed quotes for the necessary rectification works to quantify the financial loss.
• Seek expert legal advice from a strata lawyer to fully understand their rights and the best course of action for their claim.

Despite the extended window, it remains crucial for strata owners to act promptly once they become aware of a loss. Delaying action can lead to further damage to the property, potentially complicating the claim and recovery process.

For Owners Corporations: Increased Exposure & Proactive Management

For an owners corporation, the six-year limitation period creates a longer tail of liability, increasing its exposure to potential damages claims from a lot owner. This change highlights the importance of proactive management and diligent maintenance of common property to mitigate risks and avoid common strata disputes.

If an owners corporation fails to complete repairs in a timely manner, it may face:

• Significantly higher damages claims, particularly in cases involving extended loss of rent.
• Increased risk of costly legal disputes under Section 106 of the Strata Schemes Management Act 2015 (NSW).

The reform encourages an owners corporation to address repair requests promptly to limit its exposure to these risks.

Building a Strong Strata Defect Claim Within the Time Limit

The Importance of Early Factual Investigation & Evidence Gathering

A thorough factual investigation is essential as soon as you identify a loss. This process helps to establish the precise start date for the six-year limitation period, confirming the moment you, as the lot owner, first became aware of the loss stemming from the owners corporation’s failure to repair and maintain common property.

This ensures your claim is filed within the legal timeframe required by the Strata Schemes Management Act 2015 (NSW).

Cases, such as strata disputes before the NSW Civil and Administrative Tribunal (NCAT), are decided on the evidence provided. It is crucial to gather all necessary proof to establish the facts of your claim and the reasonably foreseeable loss you have suffered. Key evidence may include:

• Correspondence: All emails, letters, and other written communications with the owners corporation or strata manager concerning the defect and repair requests.
• Photographs and Videos: Visual records that document the common property defect and any resulting damage to your lot over time.
• Expert Reports: Professional assessments from qualified building consultants or engineers that detail the cause and extent of the defect.
• Witness Statements: Testimony from individuals, such as tenants or neighbours, who can verify the timeline of events and the impact of the defect on your property.

Why You Should 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 managing the claims process from the beginning.

If you are a lot owner who has suffered a loss due to common property defects, a legal professional can provide critical assistance. An experienced strata lawyer can help by:

• Preparing your case to ensure all necessary evidence and documentation are correctly compiled and presented.
• Attempting to resolve the dispute efficiently, which may help avoid lengthy and costly litigation.
• Ensuring you achieve the best possible outcome by guiding you through the correct legal steps from the outset.

Conclusion

The strata reform in NSW extends the limitation period for damages claims to six years, providing a lot owner with a more practical timeframe to act against an owners corporation for a breach of its duty to repair and maintain common property. Understanding that this period commences upon the awareness of the loss, not the defect itself, is fundamental for any strata owner looking to protect their rights under the Strata Schemes Management Act 2015 (NSW).

To ensure your claim is properly managed within this timeframe, contact the experienced strata lawyers at PBL Law Group for trusted expertise in preparing your case and achieving the best possible outcome for your common property dispute.

Frequently Asked Questions