Building Defects

With a number of apartment buildings in NSW reported to have defects, owners corporations may be concerned about whether their apartment building has defects and what they can do about it.

What is a building defect?

First of all, it is important to understand what a defect actually is.

The Home Building Act 1989 (NSW) classifies some defects as “major” defects with all defects falling outside this category considered not to be “major”.

A “major” defect is:

1. a defect in a major element of a building that is due to defective design, defective or faulty workmanship, defective materials, or a failure to comply with the structural performance requirements of the National Construction Code and that causes, or is likely to cause:
   1. the inability to inhabit or use the building (or part of the building) for its intended purpose, or
   2. the destruction of the building or any part of the building, or
   3. a threat of collapse of the building or any part of the building, or
2. external cladding of a building which causes or is likely to cause a threat to the safety of any occupants of the building if a fire occurs in the building.

What is a major element in a building?

1. an internal or external load-bearing component of a building that is essential to the stability of the building, or any part of it or
2. a fire safety system, or
3. waterproofing.

Defects which are not “major” defects are those which result from defective design, defective or faulty workmanship, defective materials, or a failure to comply with the structural performance requirements of the National Construction Code but do not cause the building to be inhabitable, collapse or result in its destruction. Examples of such defects are: efflorescence, minor cracking and gaps in timber flooring.

It is important to note that a defect to a waterproofing system (a “major element”) does not necessarily constitute a major defect. For instance, where there was staining on the ceiling of a unit as a result of incapacity of the balcony drainage in the unit above to deal with the accumulation of rainwater, it was found by the Appeal Panel of the NSW Civil and Administrative Tribunal to not be a major defect because it did not cause the building to be inhabitable, collapse or result in its destruction.

Why is it important to distinguish between major and non-major defects?

The reason it is important to distinguish between major and non-major defects is because the Home Building Act provides different time periods (limitation periods) in which an owners corporation can make a legal claim against the builder and/or developer for each type of defect.

If a defect is a “major” defect, an owners corporation will have six years from the date of the earliest occupation certificate for their apartment building to make a claim.

For all other defects, an owners corporation will only have two years from the date of the earliest occupation certificate to make a claim.

How can you find out if an apartment building has defects?

The best way to find out if an apartment building has defects is to get a report from an expert in the field. Owners corporations should seek advice from their strata manager about an appropriate expert to use, or otherwise seek legal advice.

There are defects in my apartment building, what are the next steps?

Where an owners corporation obtains a report from a building defects expert which identifies defects in their building, they will need to take steps to fix the defects because owners corporations are required to keep common property in a state of good and serviceable repair.

Outlined below are the avenues available to most owners corporations to fix the defects:

1. Write to the builder and/or developer and request that they fix the defects in the building.
2. Lodge a complaint against the builder with Fair Trading if the owners corporation is within the limitation period identified above.
3. If the owners corporation is unable to reach a resolution with the builder and/or developer after the above two steps, the owners corporation may wish to consider commencing legal proceedings. The limitation periods identified above will apply and generally legal proceedings cannot be commenced outside these periods.  Some exceptions do apply and owners corporations should seek legal advice before considering commencing litigation.
4. If the property is subject to home building insurance (usually this will be apartments three storeys or less in height) and the owners corporation is within the above limitation periods, the home building insurer should be immediately notified upon discovery of defects.
5. If the owners corporation is outside the limitation periods, it may not be possible to make a claim against the builder and developer, however owners corporations should consider seeking legal advice as there may be other legal avenues available to them.
6. Alternately, depending on the situation, the owners corporation may find the most cost effective solution is to hire a contractor themselves to fix the defects.

Owners corporations should consider building defects very early after the strata scheme is registered so that they do not lose out on any of the legal avenues open to them to seek redress for building defects.

The above is general advice only and you should not rely on it.  If you would like specific advice in relation to your building please contact us.  Sachs Gerace Lawyers has considerable experience in building defects matters and can advise owners corporations on how best to get a result if you discover building defects. So, contact our construction lawyers Sydney.