Good management of building defects is important

Understand your statutory warranties and act quickly, you don’t want to end up with the cost

Good management of building defects by committees and owners is important. Acting promptly and understanding statutory warranties will make for more successful rectification processes.

Statutory warranties are the periods and strict expiry dates that govern products and services, and the standard to which they are deemed suitable for the purpose in which they were supplied. If a product or service becomes faulty or defective within a warranty period the provider of the goods or service is generally liable.

In terms of defects, statutory warranties set the periods that allow owners to bring an action against the builder or developer for defective work.

For owners and committees of new buildings, good management of building defects is important and means prompt action to meet tight time frames so that defects can be fixed by those responsible for the work. That is, ensuring the repair costs sit with the builder, developer, or engineer, and not the collective of new owners. In understanding Australia’s national building crisis, each state has its own building standards and tolerances guide that sets the acceptable standards of workmanship in building construction. Following standards and tolerances, guides are a great starting point for assessing an issue. The guides provide a step-by-step process of assessing variations.

Missing warranty time frames is bad news

If owners and committees miss the key periods set out by statutory warranties — and generally owners only have two years to diagnose and start proceedings — they lose their ability to recover costs. After this, the defects and the defects’ damage become the responsibility of all owners.

Legislatively categorising defects is complicated and varies according to jurisdiction, type of defect, and severity. Generally, in Australia, warranty periods can be categorised into:

• Two years – minor defects
• Six years – major defects
• Ten years – major and under certain circumstances

There are circumstances where the legislation extends to seven years for major defects under certain contractual situations, and ten years for certain types of negligence claims where the defect doesn’t become apparent for an extended period.

Be prepared for your first annual general meeting and get your building inspected for defects straightaway

It is important to be prepared for your first annual general meeting (AGM) as it will be important to the good management of your building’s defects. What takes place at the first annual general meeting is key. This is the trigger point to a successful rectification process and good management of the building defect process.

The first AGM is called or held by the original owner, likely the developer or builder, and must be held within a certain time frame. The time frames include two months for New South Wales, two months or when 50 per cent of lots are owned by someone other than the original owner for Queensland, and within 18 months for Victoria.

At the meeting, you’ll work through a statutory agenda and decide upon important motions such as insurances and the election of your committee. Here, you will also have a motion for considering building defects and rectifications, appointing someone to inspect and review the building, and handing over of construction-related documents. When motions for dealing with defects and rectifications arise, owners will need to initiate and plan quotes, expert reporting, and building inspections into the budget.

Owners must be proactive in getting the building inspected for defects straightaway. This is so any or all defects can be captured and reported within the warranty period. Getting expert reporting right, along with meeting statutory time frames, is one of the most influential factors for successfully addressing your building’s defects.

Important note
Make sure you know your statutory warranty periods and always seek legal counsel.
Good legal advice throughout a rectification process is important. Your manager should be able to recommend a range of specialised strata and building lawyers to provide you and the committee with advice and to decipher what your statutory warranty is.
Every building is unique, and there is no way to guarantee exactly how much time you have left on your statutory warranty unless your occupation certificates are reviewed by an expert. Statutory warranties start from the date of ‘practical completion’ which can mean different things for different properties.
Owners and committees should arrange for preliminary legal advice within the first AGM, and it should be actioned soon after. There are instances where owners miss the ability to claim or fix building defects because they have misunderstood the date of their occupancy certificate.

If you’d like to find out more about building compliance for your strata property, download our FREE Community Living guide.