Introduction

Living in a strata scheme in NSW offers many benefits, but it also comes with shared responsibilities. One of the most important is the owners corporation’s duty to repair and maintain common property, which can lead to disputes if neglected. Understanding the legal framework surrounding these obligations is crucial for both lot owners and the owners corporation.

This comprehensive guide will explore the owners corporation’s legal duties regarding common property defects in NSW strata schemes. We will delve into the Strata Schemes Management Act 2015, outlining the steps lot owners can take when common property defects are not repaired, including mediation and legal options. We’ll also discuss timeframes, limitations, and frequently asked questions to empower you with the knowledge to navigate these situations effectively.

Understanding the Owners Corporation’s Legal Obligations

Statutory Duty to Maintain and Repair Common Property

In New South Wales, the owners corporation of a strata scheme has a strict legal obligation to maintain and repair common property. This duty is enshrined in Section 106 of the Strata Schemes Management Act 2015 (NSW). The Act mandates that the owners corporation must ensure the common property, including shared spaces like hallways, gardens, and building exteriors, is kept in a state of good and serviceable repair. This responsibility extends to renewing or replacing any fixtures or fittings that are part of the common property.

For instance, imagine a scenario where a roof leak develops in a strata building. The owners corporation is obligated to promptly address the leak and repair any damage to the common property caused by the water ingress. This includes fixing the roof, repairing damaged ceilings in common areas, and addressing any structural issues that may have arisen.

Consequences of Failing to Repair Common Property

Failing to uphold this statutory duty can have significant consequences for the owners corporation. Under Section 106(5) of the Act, lot owners who suffer a reasonably foreseeable loss due to the owners corporation’s failure to maintain and repair common property can claim damages. This means that if a lot owner experiences damage to their property or incurs expenses due to the owners corporation’s negligence, they can seek compensation.

Consider a case where an owners corporation neglects to repair a faulty pipe in the common property, leading to water damage in a lot owner’s apartment. The affected lot owner could potentially recover costs for repairs to their property, replacement of damaged belongings, and even loss of rent if they were renting out the unit.

Steps to Take When Common Property Defects Are Not Repaired

Review Strata By-laws and Common Property Memorandum

When a common property defect arises in your strata scheme, the first step is to carefully review the strata by-laws and the common property memorandum. These documents outline the responsibilities for repair and maintenance within the strata scheme. Section 107 of the Strata Schemes Management Act 2015 (NSW) (SSMA 2015) allows the owners corporation to create a common property memorandum, which can be included in the by-laws. This memorandum can specify certain parts of the common property for which individual lot owners are responsible for repairs and maintenance. By referring to these documents, you can determine who is responsible for repairing the specific defect. If the owners corporation is responsible, you can then explore the legal options available to you.

Submit a Motion to the Owners Corporation

If the owners corporation is neglecting necessary repairs to common property, lot owners have the right to submit a motion to the owners corporation. This motion will ensure that the issue is discussed at the next owners corporation meeting. Owners corporations typically hold an Annual General Meeting (AGM) each year, where various matters, including financial issues, insurance policies, strata committee elections, and by-law changes, are discussed. By submitting a motion, you can ensure that the repair issue is addressed at the next AGM. However, if the repair is urgent, lot owners can request a general meeting. General meetings are held to address specific, urgent matters and can be requested in writing. To call a general meeting, the lot owners, or a group of lot owners, requesting the meeting must hold at least a quarter of the total unit entitlements in the strata scheme.

During the meeting where the motion is discussed, both lot owners and strata committee members can vote on the repair issue. This process allows lot owners to formally raise their concerns and seek a resolution from the owners corporation.

Negotiate a Deed of Settlement

If the issue remains unresolved after the owners corporation meeting, lot owners can explore alternative methods of dispute resolution. One option is to negotiate a deed of settlement with the owners corporation. This process involves reaching an agreement outside of court and typically requires the involvement of a lawyer or conciliator to help the parties reach a compromise. Once the terms of the settlement are agreed upon, lawyers will draft a written deed of settlement outlining the obligations and liabilities of both parties. When both parties sign the deed of settlement, it becomes a legally binding agreement.

In the event that the owners corporation fails to comply with the deed of settlement, lot owners can take legal action to enforce the agreement. For instance, if a deed of settlement requires the owners corporation to investigate building works and remedy defects, but the owners corporation fails to fulfil its obligations, the lot owner can apply to the Supreme Court of NSW to enforce the deed. This legal action can also include seeking compensation for losses incurred due to the owners corporation’s breach of the deed, such as loss of rent.

Mediation and Legal Options

When informal attempts to resolve common property repair disputes with the owners corporation prove unsuccessful, lot owners in NSW strata schemes have several mediation and legal options available to them. These options provide a structured framework for resolving disputes and ensuring that the owners corporation fulfils its obligations under the Strata Schemes Management Act 2015.

Pursuing Mediation Through NSW Fair Trading

Mediation offers a cost-effective and less adversarial approach to resolving strata disputes. In NSW, lot owners can pursue mediation through NSW Fair Trading, a government agency that provides free mediation services for strata issues.

Before applying to the NSW Civil and Administrative Tribunal (NCAT), it’s generally mandatory to attempt mediation through NSW Fair Trading. This step encourages parties to reach a mutually agreeable solution without resorting to formal legal proceedings.

During mediation, an impartial mediator facilitates discussions between the lot owner and the owners corporation, helping them identify common ground and potential solutions. If an agreement is reached, it can be documented in writing, providing a clear path forward for repairs.

Making an Application to NCAT

If mediation fails to resolve the dispute, lot owners can apply to NCAT, a specialist tribunal that handles a wide range of strata matters, including disputes over common property repairs.

NCAT has the authority to issue legally binding orders that compel the owners corporation to undertake necessary repairs. In addition to ordering repairs, NCAT can also make orders regarding:

• Payment for repairs already completed by the lot owner
• Compensation for financial losses suffered due to the owners corporation’s failure to repair
• Interim orders to prevent further damage or deterioration of the common property

To initiate proceedings at NCAT, lot owners need to file an application outlining the details of the dispute and the desired outcome. The process involves a hearing where both parties can present their case and evidence.

NCAT’s decisions are based on the evidence presented and the relevant provisions of the Strata Schemes Management Act 2015.

Claiming Damages for Losses

Under Section 106(5) of the Strata Schemes Management Act 2015, lot owners have the right to claim damages from the owners corporation for any reasonably foreseeable losses suffered as a result of the owners corporation’s failure to repair common property.

These losses can include:

• Damage to lot property: For example, water damage to carpets, flooring, or personal belongings caused by a leaking roof.
• Loss of rent: If the defect renders the lot uninhabitable, lot owners can claim compensation for lost rental income.
• Alternative accommodation costs: If the lot owner is forced to move out due to the defect, they can claim reimbursement for alternative accommodation expenses.
• Costs of repairs: If the lot owner has already undertaken repairs to mitigate further damage, they can seek reimbursement from the owners corporation.

To successfully claim damages, lot owners need to demonstrate that the owners corporation breached its duty to repair and that the losses were a direct consequence of this breach. It’s important to document all losses and expenses incurred, including invoices, receipts, and evidence of damage.

Timeframes and Limitations

Understanding the Two-Year Limitation Period

In New South Wales, there’s a two-year limitation period for lot owners to bring claims against the owners corporation for failing to repair common property defects. This means that legal action must be initiated within two years from the date the lot owner becomes aware of the loss caused by the defect.

Imagine a scenario where a lot owner discovers water damage in their unit in January 2023 due to a leaking pipe in the common property. They must commence legal proceedings against the owners corporation by January 2025. Failing to do so may bar them from pursuing compensation for their losses.

When the Owners Corporation Can Defer Repairs

While the owners corporation in a strata scheme has a strict duty to maintain and repair common property, there are certain circumstances where they can legally defer these repairs.

One such instance is when the owners corporation is taking legal action against a third party, such as the builder or developer, for defects in the construction of the common property. For example, if the owners corporation is pursuing a claim against the builder for faulty waterproofing that led to water damage in several lots, they can defer repairs until the legal action is concluded. However, this deferral is contingent upon the safety of the building, structure, or common property not being compromised during the delay.

Another situation where deferral is possible is when the owners corporation, through a special resolution, deems the repair work inappropriate. This could occur if the cost of repair is exorbitantly high compared to the benefit derived, or if alternative solutions are deemed more suitable. However, this decision must not compromise the safety or appearance of the building or common property.

Conclusion

Understanding the legal framework surrounding common property defects in NSW strata schemes is crucial for both lot owners and owners corporations. The owners corporation has a strict duty to repair and maintain common property, and lot owners have legal avenues to pursue if these obligations are not met.

By following the proper procedures, engaging in open communication, and seeking professional advice when needed, disputes can often be resolved effectively, ensuring a well-maintained and harmonious strata environment for all.

Frequently Asked Questions