Introduction

The charm of strata ownership in NSW has been growing, offering a strong opportunity for investment and an exciting living choice. But, this journey often hits a snag due to growing arguments among lot owners, strata managers, and owners corporations, especially about the tricky topic of common property repairs and building defects.

So, where does the buck stop when it comes to managing and financing repairs due to common property defects? And how extensive is the responsibility of the owners corporation or strata management in navigating through these repair predicaments? Dive into this article to find answers to these pertinent questions, ensuring you stand on solid ground in your strata living journey.

Duty of the owners corporation to repair NSW strata defects

The Strata Scheme Management Act 2015 (SSM Act), through Section 106, enforces a stringent duty upon the owners corporation to adequately maintain and repair the common property and any personal property under its vestige. This obligation translates to the necessity for the owners corporation to refresh or replace any fixtures and address defects within the strata property. Should there be a failure or breach in this statutory duty, lot owners hold the right to seek damages for any reasonable, foreseeable losses resulting from the paucity of repair or maintenance.

Typically, the owners corporation shoulders the responsibility to maintain common property within a strata scheme. Section 107(1) of the SSM Act, however, provides a pathway for the owners corporation to delegate some of this responsibility to lot owners through the adoption of a common property rights memorandum in its by-laws. Absent such a memorandum or specific by-law, the duty reverts to the owners corporation.

Crucially, the extent of this duty casts a shadow of questions: does adherence to this obligation merely equate to sustaining the strata scheme in a usable state? Or does the law mandate the owners corporation to stretch beyond, ensuring the strata property sparkles in optimal condition? Let’s delve deeper into the legalities.

Legal Principle #1: Reasonable necessity bounds the owners corporation’s duty to repair and maintain common property.

The duty of the Owners Corporation to repair and maintain the strata property is not unqualified in nature. The lot owners cannot compel the Owners Corporation to carry out any repairs which are not fundamentally necessary to ensure the strata building is safe and usable. The NSW courts have similarly upheld this principle.

In Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425, the Supreme Court noted that the Owners Corporation’s obligation to repair and maintain the strata property is constrained by a concept of reasonable necessity. Moreover, replacement or upgrades to the common property, in the course of repair and maintenance work, are justified only when the item cannot be kept in a state of good and serviceable repair. In this instance, the court prevented the Owners Corporation from conducting a comprehensive set of work, essentially amounting to a significant refurbishment of the building, since the involved strata building could be rendered safe and usable with a more modest set of repairs to common property.

Defining ‘reasonable necessity’ in Arcidiacono v Owners of Strata Plan No 17719 [2020] NSWCA 269, the court declared that reasonable necessity implies that the use or development of the land with the common property is not possible without the repair or replacement of the common property to rectify the defect.

To illustrate, suppose the roof of your strata property has been damaged, resulting in some water damage. Here, it is the statutory duty of the Owners Corporation to repair the roof and remedy the damaged items. However, the Owners Corporation cannot be forced to replace the roof altogether, unless mere repairs do not reasonably suffice to rectify the defect.

Assessing ‘Reasonable Necessity’ for Repairing Common Property Defects in NSW Strata Schemes

Understanding the concept of “reasonable necessity” is pivotal when establishing the extent to which lot owners can request the owners corporation to execute repairs or rectification work for defects in common property. It’s crucial to recognize how to discern if a specific repair is reasonably necessary.

In Owners – Strata Plan No. 33368 vs Gittins [2022] NSWCATAP 130, the principle established was that determining whether a remedial work or repair is the minimum necessary for the owners corporation to comply with its statutory duty is, essentially, a question of fact and evidence. Simply put, what is deemed as a reasonably necessary repair will oscillate on a case-by-case basis, contingent upon the facts of the case and the evidence presented in court.

Moreover, the owners corporation is afforded a level of judgement and latitude in deciding the extent to which a repair or replacement work is necessary to fix the defect. If the functionality of an item can be preserved through mere repair, the owners corporation can decide against renewing or replacing it. Similarly, strata lot owners have the right to oppose replacement or renewal if the existing common property is operating as intended, and this functionality can be sustained through adequate maintenance and repair to the common property.

Legal Principle #2: Preventative repairs and maintenance of common property can be justified only if it is incidental or necessary in nature

Is it permissible for the owners corporation to execute rectification work even when it’s not deemed reasonably necessary? Can the strata committee or strata manager initiate preventative actions for a foreseeable strata defect? The short answer: yes, owners must be mindful of this.

In Loneragan v The Owners-Strata Plan No 16519 [2020] NSWCATAP 177, the court declared that the statutory duty under Section 106 of the SSM Act envelops the action of taking preventative measures to thwart malfunction in the common property, implying that managing strata effectively includes foreseeing and mitigating potential issues.

Moreover, in Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425, it was affirmed that the owners corporation may engage in preventative maintenance actions if they are incidental to any repair and maintenance work. Preventative maintenance is also justified when it becomes necessary due to a building defect, damage, or for the proper functioning of an item in a common area. In such circumstances, owners corporations are compelled to undertake preventative maintenance steps to fulfill their statutory duty of maintenance and repair, and potentially cover the cost thereof.

Key takeaways for lot owners and strata managers

The key takeaway here is that lot owners can ask the owners corporation to repair and maintain the common property as a matter of right. However, it’s pivotal to recognize that renewal or replacement of common property is constrained by the concept of reasonable necessity. In essence, this means it is only when the common property ceases to operate efficiently, or not at all, or descends into a state of disrepair that these actions should be taken.

As a lot owner, it might be difficult for you to assess if the sought repair is reasonably necessary. Conversely, if you’re a strata manager, or a member of the owners corporation or strata committee, fully grasping your duties and obligations is paramount. Regardless of your position in the strata environment, sourcing expert legal advice, especially amidst the complexity of strata repairs, becomes vital. Strata lawyers, adept in navigating the intricate stipulations set by the NSW government and rooted in home building norms, can offer the precise guidance you need.

At PBL Law Group, our expert strata lawyers are well-versed in all dimensions of strata disputes, whether they involve litigation or not. Reach out to us today to explore more and assure that actions to maintain the common property are in alignment with legal and statutory guidelines!