As a starting point, Owners Corporations have the responsibility under Section 46 of the Owners Corporations Act 2006 to repair and maintain common property and chattels, fixtures, fittings and services related to the common property or its enjoyment.
This means if common property is in disrepair, the Owners Corporation has an obligation to fix what is broken and to ensure that lot owners are not incurring loss or damage arising from the defective common property.
Owners Corporations also have obligations under the Water Act and can be liable for loss and damage caused to lot owners and other neighbours resulting from unreasonable water flow that arises from common property issues.
The most common claims involve leaking common property caused by defective waterproofing that then leak into a private lot causing damage. In some cases, an Owners Corporation may be liable to fix the issues caused to the private lots as well as consequential loss such as carpet replacement and alternative accommodation costs, by way of example.
The new amendments confirm that whether or not there is a claim under the Water Act, if water falls on common property, it is deemed to be part of the common property allowing lot owners to take action against an Owners Corporation for flows of water from common property.
This broadens the obligations of an Owners Corporation in that it is now not necessary to prove unreasonable flow but rather if water is on common property and is not properly directed to storm water and the result is damage, it may be easier for a lot owner to take action against the Owners Corporation for damage that results.
Original Building Defects
Tisher Liner comes across Owners Corporations that have buildings built less than 10 years ago that were not built properly by the builder. Common examples include combustible cladding, lack of or defective waterproofing, structural issues and other non-compliance with building standards.
As a subsequent owner, the Owners Corporation has the ability to take action against the builder (and sometimes other parties such as architects, building surveyors and plumbers) for defective building work to common property elements.
However, in order to issue legal proceedings against a builder or other parties, the Owners Corporation must pass a special resolution. This can be difficult, particularly if there are a larger number of lot owners who don’t really want to take part in the governance of the Owners Corporation or where the original developer still owns a number of the lots in the development.
The amendments provide two protections for Owners Corporations:
- Firstly, developers (initial owners) may not vote on any resolution that is a resolution to take action in respect to building defects; and
- Secondly, a lot owner may apply to the Victorian Civil and Administrative Tribunal (VCAT) to commence proceedings without a special resolution passing if a special resolution vote is called and it would have passed if it were an ordinary resolution (i.e. 50% of the votes were in favour). It is then up to lot owners who object to the action being taken which need to convince VCAT that the action should not be taken as requested. This ensures that the majority can take action in the Tribunal in circumstances where it is reasonable for the Owners Corporation to take such action.
This means that Owners Corporations may find it easier to take action against builders who have not done a proper job in building works.
In the event that an Owners Corporation has issues affecting their common property, it is important that the committee get legal advice on their options, potential liability to lot owners and their ability to recoup some or all of their costs to repair from third parties.
Owners Corporations have 10 years to take action for original building defects. Don’t leave it too late as your options will be limited.
We look forward to working with you throughout this implementation phase. Should you require any further information, please contact your VBCS Community Manager.