The laws around strata property water damage
We explain your legal rights and responsibilities when it comes to strata property water damage, to help you deal with water damage in your property effectively
The boom in strata living has generated a 72 per cent rise in the number of insurance claims for faults, including strata property water damage, experienced in the past five years, according to a report released by Chubb Insurance in 2019.
No strata committee or owner wants to find themselves in the position of not meeting the requirements for an insurance claim, so to best protect the owners corporation from liability when property damage or defects arise, it is important to understand what needs to be done. We explain it all, with a focus on the laws around strata property water damage.In this article, we explore three all-important topics lot owners need to understand when dealing with the laws around strata property water damage:
- Building defects
- Strata insurance claims
- Legal measures that protect owners corporations from strata property water damage
When dealing with the laws around strata property water damage, it’s necessary to understand the correct terminology and definitions.
A building defect is a physical fault in the infrastructure caused by a defective design, sub-standard workmanship, faulty materials or a failure to comply with the structural performance requirements of the National Construction Code. Such defects can force residents to modify how they use the building and may even make it dangerous or impossible for them to access the property.
Common defects include things like faulty waterproofing, poorly constructed balconies, using incorrect waterproof membranes to seal showers or balconies, or not installing them at all—many of which can lead to strata property water damage.
Faults can also occur in structures essential to the building’s stability, such as foundations, footings, walls, roofs, or support beams.
Strata insurance claims
When strata property water damage is discovered, the first thing most strata committees do — after ascertaining the cause and extent of the damage — is to lodge a claim with their strata insurer.
In many instances, submitting a claim doesn’t mean it will be approved — insurers may reject the claim. They may cite that the damage had existed for some time, and any “reasonable person” would have known about the damage and repaired it earlier or taken reasonable steps to prevent the fault from occurring in the first place.
However, strata committees or owners corporations with a good maintenance history and detailed maintenance records may be able to defend these claims by demonstrating a governance model that takes building maintenance and performance seriously, for example using a service like Community Health & Safety.
Legal measures that protect owners corporations from strata property water damage
The NSW Government is leading the way in implementing legislative change and introducing regulations to better protect strata committees, owners and residents from building defects.
The Strata Building Bond and Inspections Scheme (SBBIS) introduced under the NSW Strata Schemes Management Act 2015 (Part 11) applies to all contracts for residential (or part residential) works entered into after 1 January 2018, if the development is not covered under the Home Building Compensation Fund.
The Scheme requires developers to lodge a bond of 2 per cent of the contract price with NSW Fair Trading before the issue of occupation certificates. This bond will cover the costs of defect rectification works identified in the final inspection report.
Industry bodies have been lobbying hard to improve consumer protection in buildings subject to strata schemes. However, much work is needed in other Australian states to bring these protections in line with those applicable to strata committees in New South Wales.
Here are six simple steps your strata committee can take that may help you avoid costly building defects that may lead to strata property water damage, and make sure you are covered if any defects arise.
- Ensure your strata property has adequate insurance that covers all common property. Public liability insurance is also required. It is recommended your strata committee take out additional policies such as office bearers’ liability cover, workers compensation cover, catastrophe cover and flood cover.
- Make sure your building plans are sufficiently detailed to distinguish between common property areas the owners corporation is responsible for maintaining and repairing and property the individual lot owners are responsible for. This will be of great help when it comes to deadling with strata property water damage in particular.
- Share these plans with a detailed summary of which property plant and equipment the strata committee takes care of, which the lot owners must maintain.
- Consider a maintenance schedule, which will help the owners corporation stay on top of the current condition of major plant and capital, specify when they are next due for servicing and identify anything needing immediate repair.
- Establish a capital works, sinking or maintenance fund to cover ongoing maintenance and repairs.
- Ensure maintenance is a standing item on your strata committee meeting agenda and annual general meeting agendas so that strata maintenance and repair works are identified and progressed quickly.
When it comes to managing a strata property, there are various compliance or legislative requirements that are needed to protect owners and residents. When the situation allows, you don’t want to miss out on the chance of an insurance claim. Click here to learn more about Community Health & Safety and related services to ensure your protection. You can also click here to download our FREE Community Living guide series on defects. If you would like to learn more about the services we offer, click here for a free assessment.