Introduction

Living in a strata scheme in NSW has its upsides but comes with shared responsibilities too. One major task is ensuring that the owners corporation handles repairs and maintains the common areas in great condition. When someone doesn’t fulfil this duty, it can cause quite a stir. Understanding the rules about these chores 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 (NSW), 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), which mandates that the owners corporation ensure the common property is kept in a state of good and serviceable repair.

Moreover, the Act extends this responsibility to renewing or replacing any fixtures or fittings that are part of the common property. Common property includes shared spaces such as:

• Hallways
• Gardens
• Building exteriors

For instance, imagine a scenario where a roof leak develops in a strata building. The owners corporation is obligated to:

• Address any structural issues that may have arisen
• Promptly address the leak
• Fix the roof
• Repair damaged ceilings in common areas

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 Strata Schemes Management Act 2015 (NSW), lot owners who suffer a reasonably foreseeable loss due to the owners corporation’s failure to maintain and repair common property can claim damages. Such compensation may cover:

• Repairs to their property
• Replacement of damaged belongings
• Loss of rent if they were renting out the unit

For example, if a faulty pipe in the common property leads to water damage in a lot owner’s apartment, the affected owner could recover these costs.

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 who is responsible for repair and maintenance.

Section 107 of the Strata Schemes Management Act 2015 (NSW) allows the owners corporation to create a memorandum that:

• Specifies parts of common property for which individual lot owners are responsible.
• Is included in the by-laws to clarify repair duties.

By referring to these documents, you can determine who must address the defect. If the owners corporation is responsible, you can then explore the legal options available.

Submit a Motion to the Owners Corporation

If necessary repairs remain neglected, lot owners have the right to submit a motion requesting that the issue be placed on the agenda at the next owners corporation meeting.

Owners corporations typically hold an Annual General Meeting (AGM) each year, where they discuss:

• Financial issues
• Insurance policies
• Strata committee elections
• By-law changes

By lodging your motion in advance, you ensure the repair issue is formally considered at the AGM.

However, if the defect is urgent, you can instead request a general meeting. To do so:

• Submit a written request specifying the urgent matter
• Ensure the requesting group holds at least one-quarter of the total unit entitlements

During either meeting, both lot owners and strata committee members vote on the motion, allowing you to raise concerns and press for a resolution.

Negotiate a Deed of Settlement

If the meeting fails to resolve the issue, lot owners can pursue alternative dispute resolution by negotiating a deed of settlement. The process typically involves:

1. Engaging a lawyer or conciliator to facilitate compromise.
2. Agreeing on terms and drafting a written deed outlining obligations and liabilities.
3. Both parties signing the deed, creating a legally binding agreement.

If the owners corporation neglects its duties under the settlement—for example, to investigate building works and remedy defects—the lot owner may apply to the Supreme Court of NSW to enforce the deed. Furthermore, this legal action can include seeking compensation for losses incurred due to the breach, such as lost rent.

Mediation and Legal Options

Pursuing Mediation Through NSW Fair Trading

When informal attempts to resolve common property repair disputes fail, mediation offers a cost-effective and less adversarial approach. 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 this process, an impartial mediator facilitates discussions between the lot owner and the owners corporation. Their role involves:

• Helping identify common ground
• Exploring potential solutions
• Working toward agreement

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 (NSW).

Claiming Damages for Losses

Under Section 106(5) of the Strata Schemes Management Act 2015 (NSW), 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 specific circumstances where they can legally defer these repairs:

• During legal action against third parties – 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 instance, if they are pursuing a claim against the builder for faulty waterproofing that led to water damage in several lots, repairs can be deferred until the legal action concludes.
• When deemed inappropriate through special resolution – When the owners corporation, through a special resolution, determines the repair work to be inappropriate. This might occur if the repair costs are exorbitantly high compared to the benefits, or if alternative solutions are considered more suitable.

However, it’s important to note that any deferral is contingent upon the safety of the building, structure, or common property not being compromised during the delay. Additionally, decisions to defer repairs 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.

If you are dealing with unresolved common property defects or require assistance navigating your rights and responsibilities within a strata scheme, seeking specialised legal advice from experienced strata lawyers is recommended. Contact PBL Law Group today for guidance tailored to your specific circumstances.

Frequently Asked Questions