Strata Speak

New Duties of Care for Building Defects – Legislation Update

The strata industry has received some exciting news recently that the Design & Building Practitioners Act was passed early in June providing some new protection for strata schemes across NSW.

The purpose of this new legislation is to hold anyone involved in the design and construction of a building accountable for the product they help to produce.

There are three key elements that have been introduced through this legislation:

  • Builders, designers, product manufacturers and suppliers, and other people involved in the design and construction process now owe a duty of care to the building owners – not just the developer;
  • The Secretary of the Department of Customer Service now has an extended regulatory scope to oversee these issues; and
  • A registration and certification process has now been introduced for certain specialists, consultants and practitioners.

What does it mean for your scheme?

Given the legislation is so new there are still some questions on this.  However, here is what some of the industry’s leading strata lawyers are telling us:

  • This imposes a retrospective duty of care which applies to defects that you became aware of in the past ten years;
  • It covers both commercial and residential schemes;
  • These rights go beyond those in the Home Building Act 1989;
  • If you’ve got defects that you have rectified yourself, are in the process of rectifying, or need to be rectified and you have become aware of these defects in the last ten years then you may have a claim against any of those people captured by this new legislation;
  • The claim that is to be made would be for compensation or consideration, rather than for the contractor to return to the building and complete the rectification work.

So what should your scheme do with this information?

This is where it gets tricky because there is no clear guidance on what you have to gain from this legislation. The bottom line is that you are going to need a lawyer, so a decision needs to be made as to the amount your claim is worth and whether the cost of engaging a lawyer would outweigh this. For example, a rectification job that cost you $10,000.00 might not be worth claiming as you will easily exceed this in legal fees. The good thing is, you’ve got a ten-year clock from the date you first notice the defect, so you can wait and see how the legislation is implemented before taking action.

Here are our step by step recommendations to get you started:

  • Collate your defects list. Contact your building manager or strata manager for a consolidated list of your current defects or for a list of defects that your scheme has previously rectified at its own cost. Suggest to your strata manager that this item is placed on the agenda at your next committee meeting so it can be discussed.
  • Establish a timeline. If the defect was noticed more than ten years ago, it won’t be claimable under this legislation.
  • Establish the costs. Find out how much it cost your scheme to rectify these defects previously, or how much it is likely to cost. You can contact a defects consultant or an expert in the relevant field for assistance with this.
  • Consult your strata manager & a lawyer. If the costs are high enough, it might be worth getting a lawyer involved as soon as possible to try and make a claim under this legislation. We don’t generally recommend getting lawyers involved too quickly, as there are plenty of more practical and pragmatic options available however in this context you need professional guidance. Speak with your strata manager to obtain some recommendations for strata lawyers who can assist you. In particular, you should look for lawyers who specialise in strata defect litigation as there are many nuances in strata law that general property lawyers are not aware of and do not consider.

As this legislation evolves, we’ll keep you up to date on any findings and decisions made that might further impact your schemes. If you would like more information, get in touch with your strata manager so that they can help you look into this further.

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