Defects In Strata

Author: Zac Gleeson, Managing Director of GQS

Defects and building compliance in strata properties have been a hot topic all around the world. The financial hardship and even life threatening circumstances it can create to lot Owners in a Strata property is something that can not be ignored. The body corporate regulations in QLD which came into effect in March 2021 have forced Bodies Corporate to at the very least consider the engagement of an expert to identify defects. It is important to know as a body corporate, especially if your building is relatively new, as to your obligations as a body corporate and your rights to recoup monies if defects are identified.

The Body Corporate under the BCCM Act has obligations to maintain common property in good condition, this means irrespective of who caused the building defect the Body Corporate are obligated to take action and ensure any common property defects are rectified.

First and foremost defects must be identified through an expert report prepared by qualified QBCC licenced building inspectors – like us. These defects could form part of the common property, exclusive use areas, within the internal areas of a lot or on the roof. Timely action is paramount to ensure the body corporate is not time barred from any potential recourse against the builder or insurance scheme.

Once defects are identified the body corporate has options as to how the defect works are rectified and at who’s cost, in order they would be:

1. The engagement of a Strata Lawyer to assist in the preparation of any proceedings against the Builder and advising the body corporate on its rights, obligations and options.“We cannot stress the importance of early intervention enough. Not only is early intervention needed to preserve the body corporate’s rights (which may be lost in their entirety after a limitation date) it:

   – will also identify defects before they deteriorate further and become more expensive to remediate; and
   – shows the body corporate is meeting its statutory obligations. “ Todd Garsden, Partner at Mahoneys (https://www.mahoneys.com.au/staff-member/todd-garsden/)

2. Contact the entity (Builder) who caused the defect and advise them of the issue and request them to rectify. To be armed with the correct documentation the Developer is obliged to provide the Body Corporate with the documents required so they are in a position to take action against the construction contract. The builder was originally engaged to complete the building without defects, if defects are identified they have breached the construction contract.- If no response is received or no commercial outcome (settlement) is agreed upon – proceedings can commence against the entity in question, usually first by making a claim to the Queensland Building and Construction Commission (QBCC).

   – Important to note claims to the QBCC must be made within:
   12 months of the body corporate becoming aware of the building defect; and either: 6 years and 6 months of the building work being completed for a building defect which relates to water ingress or one that adversely affects the structural integrity, health or safety of occupiers or the use of a building; or 12 months of the building work being completed for a building defect that is faulty or unsatisfactory because it does not meet a reasonable standard of construction or finish expected of a competent QBCC licence holder.
   – Important to also note that there may be a claim against the home warranty insurance scheme (run by the QBCC) however this is only available to buildings no more than 3 storeys high.
   -It is recommended that the Building Inspector and lawyer be engaged to prepare the application to the QBCC.

   – If the application is accepted by the QBCC they will assess the defects independently. It is important to be aware that there could now be the Builder, QBCC and Body Corporate engaged in discussion as to the intricacies of the defects and as to who’s kitty the rectification costs will come out of. It is recommended that the Body Corporate engage the Building Inspector / Expert to represent them at any on-site meetings to ensure the body corporate understand what is happening and that the body corporate is represented by a licenced professional who understands the position of the Builder and QBCC as well as the body corporate’s best interests.

   – Favourable outcome would be for the QBCC to direct the Builder to rectify defects threatening to suspend their building licence, or if the Builder is defunct, the QBCC to manage the rectification through the home warranty scheme (3 storeys or less).

   – If a favourable outcome is still not achieved there may be an option to have the matter progressed through the courts based on the body corporate’s rights which would require expert legal and further building consultancy advice.

In summary;

• The body Corporate is obliged to maintain the common property of the scheme, this includes building defects.
• A licenced professional inspector should be engaged to prepare an expert report pertaining to any defects.
• If found, rectification of the defects should first be sought from the Builder (note typical QBCC timeframes should be used as strict guidelines and completing this exercise prior to 12 months after practical completion is recommended to ensure the greatest chance of nil financial penalty against the body corporate) and proceedings should commence against the construction contract.
• Submit a complaint to the QBCC should the Builder not rectify or a commercial outcome (settlement) not have been agreed.
• Ensure you know your rights and obligations throughout by engaging a licenced building inspector / building consultant and a Strata Lawyer.