Construction defects in a strata development can have an overwhelming financial and emotional impact on a unit owner. All industry players are impacted, with the question of blame bouncing between architects, engineers, certifiers, developers and builders. In the meantime, hundreds of unit owners, investors and renters face uncertainty and many occupants are unable to live in their units as the stability and safety of their buildings are scrutinised.

Warranties for building work

As with all residential building work, a newly-built strata unit comes with various implied statutory warranties, even if these are not stated in the building contract.

These warranties not only apply between the builder/developer and original owner but, subject to time limitations, may pass onto subsequent owners. They cannot be avoided by contrary provisions in a building contract.

The Home Building Act 1989 (NSW) implies specific warranties into every contract for residential building work, namely that:

• The work will be completed with due care and skill and in accordance with any plans and specifications provided in the contract;
• All materials supplied will be good and suitable for the purpose for which they are used and, unless otherwise stated, will be new;
• The work will be done in compliance and accordance with applicable laws;
• The work will be done with due diligence and within the time set out in the contract and, if no time is stipulated, within a reasonable time;
• If the work is the construction of a dwelling or comprises alterations, additions, repairs or renovations to a dwelling, the work will result in the dwelling being reasonably fit for occupation as a dwelling; and
• The work and materials used to do the work will be reasonable for the specified purpose or result.

What is a building defect?

It is important to distinguish between major defects and minor defects as the warranty period differs between each. Major defects are covered by a six-year warranty and other ‘general’ defects (those not classified as a major defect) have a two-year warranty period.

A major defect is defined as:

‘A major element of a building (such as a fire safety system, waterproofing or structures critical to the building’s stability such as foundations, footings, walls, roofs, beams or columns) which causes or is likely to cause all or part of the building to be uninhabitable or unable to be used for its intended purpose, or which threatens or is likely to cause the collapse or destruction of the building as a whole, or part of it.’

Responsibilities for repairing defects

The holder of the contractor licence (or person required to hold a contractor licence) under the building contract is the party responsible to repair any defects. Generally, this will be the developer or builder of the project.

The statutory warranties extend to defective work that has been undertaken by a subcontractor on behalf of a principal contractor. For example, if the defective work concerns tiling that was carried out by a subcontractor of the principal builder, then the principal builder remains responsible to the property owner for the defective work (however they may in turn rely on the warranty between the principal and tiler).

Defects in a strata scheme

Defective work in a strata complex may relate to the unit itself and/or the common area. Identifying and acting on defects and potential defects before they escalate is essential to ensure that action can be taken within the warranty limitation periods.

The owners’ corporation is responsible for alerting a developer or builder to defects concerning the common property and for arranging repairs and maintenance. This involves requesting maintenance schedules, manuals and warranty documents for various facilities and equipment, carrying out regular maintenance activities, prioritising defects and agreeing on and appointing an expert to carry out defect inspections. Strata owners should stay informed regarding the management of common property and the progress of any defective work claims by attending regular strata meetings.

The longer time goes on, the more difficult it is to distinguish whether a building issue is a true defect or stems from poor maintenance and/or wear and tear. Indeed, the latter may well be argued by a developer should proceedings become necessary.

Get Legal Advice

If you believe your strata unit or the common areas in your strata building have defective building work, you should act quickly. Knowing your rights and the relevant time limitations in pursuing a claim for defective work will empower you to take the appropriate steps to have the work rectified.

If you need more information, assistance, or advice on how to proceed please call us on (02) 9963 9800 or email [email protected]. To learn more about how Etheringtons Solicitors can assist you please see our blog here.