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You are here: Home / Maintenance & Common Property / Maintenance NSW / NSW: Q&A How Do I Know if a Strata Building Has Concrete Cancer?

NSW: Q&A How Do I Know if a Strata Building Has Concrete Cancer?

Published November 24, 2015 By The LookUpStrata Team 5 Comments Last Updated October 2, 2020

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Lot owners from NSW have questions about concrete cancer in their building and informing all lot owners.

Jump directly to the QUESTION you are after:

  • QUESTION: Is there any way I can find out whether an apartment I am thinking of buying is in a building which has concrete cancer?
  • QUESTION: When it comes to informing lot owners about concrete cancer, when does the executive committee cease to act in good faith for all owners and not just a few of the executive committee?
  • QUESTION: We are in the process of an NCAT dispute over the Owners Corporation’s failure to repair the common property. I also hold a general position on the strata committee. Does this constitute a strata committee conflict of interest
  • ARTICLE: It’s an Epidemic – Don’t bury your head in the Sand

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Question: Is there any way I can find out whether an apartment I am thinking of buying is in a building which has concrete cancer?

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Answer: It is so important that all purchasers carry out their due diligence before buying into an owners corporation.

This is a great question and it is so important that all purchasers carry out their due diligence before buying into an owners corporation and understand their role and responsibility as a member of the owners corporation, which is effective as soon as settlement takes place.

The most thorough way to ensure that you have as much information as possible about an apartment within an owners corporation is to have an independent Strata Inspection Report carried out, which can be arranged by yourself as the purchaser or by a qualified & experienced Strata Report Company.

When you engage an independent Strata Report Company, they liaise directly with the Strata Manager on your behalf, and request to view and inspect all of the books and records associated with the apartment and owners corporation for approximately the last 3-7 years.

They then collate a detailed and thorough Strata Report which will provide as much history and current information about the property and owners corporation as possible and ensures that you are informed of the governance and operation of the owners corporation.

They will also identify any upcoming expenses, repairs or major works (such as concrete cancer) which arms you with the knowledge and power to negotiate on a suitable purchase price, as well as the opportunity to ask further questions or obtain further information around matters that have been identified within the Strata Report.

We hope the above has been helpful but if you would like to discuss things further please feel free to contact us

Jane Giacobbe
Strata Reports Victoria & NSW
E: [email protected]
P: 0402 341 848

This article is for reference purposes only and is not intended to be a comprehensive review of the developments in the law and practice or to cover all aspect of the subject matter. It does not constitute legal or other advice and should not be relied upon this way. Readers should take legal or other advice before applying the information containing in this publication.

This post appears in Strata News #367.

Question: When it comes to informing lot owners about concrete cancer, when does the executive committee cease to act in good faith for all owners and not just a few of the executive committee?

I am the treasurer of a small block with a potential for concrete Cancer. The other office bearers wish to only advise the executive committee and defer any further investigation for 4 years, and not advise the external owners at this time.

When does the executive committee cease to act in good faith for all owners and not just a few of the executive committee?

Answer: Concrete cancer is classed as a building defect and therefore needs to be disclosed to insurers as part of the owners corporations Duty of Disclosure.

concrete cancer TYRONE: In accordance with section 13 of the Insurance Contracts Act 1984 A contract of insurance is a contract based on the utmost good faith and there is implied in such a contract a provision requiring each party to it to act towards the other party, in respect of any matter arising under or in relation to it, with the utmost good faith.

The duty of utmost good faith among other things requires an insured to disclose all information relevant to the insurer’s decision to accept the risk and this forms part of the insured’s responsibilities under their duty of disclosure.

Concrete cancer is classed as a building defect and therefore needs to be disclosed to insurers as part of the owners corporations Duty of Disclosure. Failure to notify an insurer of a pre-existing defect such as concrete cancer may mean that in certain circumstances the Insurer is entitled to avoid the contract altogether or the Insurer may be entitled to reduce liability in respect of a claim to the amount that would place the insurer in a position in which the insurer would have been if the failure had not occurred or the misrepresentation had not been made.

Each circumstance of disclosure will differ on a case by case basis depending on the circumstances and level of knowledge of the problem for example there is a vast difference between an owners corporation having a defect report which reports on defects like concrete cancer by a qualified professional and an owners corporation who may only suspect there is concrete cancer. It is always recommended when there are suspected defects to a property the owners seek advice from a qualified insurance professional.

Tyrone Shandiman

ROD: There are a few things to consider on this interesting question:

  1. With your comment ‘the potential for Concrete Cancer’, how did the notification of potential concrete cancer occur? Has an expert reported on this item and has the urgency of any required rectifications been advised? Most good engineers will be able to provide a recommended timeframe to address any items that they inspect and report on.
  2. If a report was done, this should be placed on the owners corporation records.
  3. You as an owner are entitled to place a motion on the next General Meeting to raise this item with your fellow owners. The motion I would suggest is to arrange for a professional report to further investigate the concrete spalling including the recommended timeframe for repair. If such a report has already been arranged, the motion would be to undertake repairs on the concrete spalling as investigated.

I hope this provides you with a few options to consider. Best of luck!

Rod Smith
The Strata Collective
T: 02 9879 3547
E: [email protected]

This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.

This post appears in Strata News #195.

Question: We are in the process of an NCAT dispute over the Owners Corporation’s failure to repair the common property. I also hold a general position on the strata committee. Does this constitute a strata committee conflict of interest?

We are in the process of an NCAT dispute over the Owners Corporation’s failure to repair the common property. We have concrete cancer that is damaging the flooring in our unit and the Owners Corporation have not made any repairs for nearly 2 years.

I hold a general position on the Strata Committee. We have five positions. At a general meeting scheduled for next week, there is a motion to remove me from the Strata Committee because of ‘conflict of interest’. Is this valid?

The whole process has become very ugly. Even if I wasn’t on the Strata Committee, I believe as an owner we have a right to all information. I would still receive the agenda of Strata Committee meeting and should able to attend but not speak unless approved. I should also receive the minutes.

Is this really a strata committee conflict of interest?

Currently, the Strata Committee does not do any of this – no agenda, no minutes etc. I only joined the Strata Committee at AGM a year ago. I presume the strata committee conflict of interest is that we are taking the Owners Corporation to NCAT for failure to repair the common property.

Answer: The act doesn’t recognise the present situation as a conflict of interest.

The act doesn’t recognise the present situation as a conflict of interest. They may be referring to clause 18 of Schedule 2 of the SSMA 2015, however, this talks about pecuniary (monetary) conflicts of interest rather than common property repairs that impact a lot (of which section 106 is more relevant).

If a strata committee conflict of interest is of concern to owners at the GM….

If a conflict of interest is of concern to the owners at the General Meeting, I would recommend advising that you will abstain from voting on this particular item.

There are a number of ways to remove a strata committee member:

  • Special Resolution at a General Meeting – Section 35 of SSMA 2015
  • or NCAT order – Section 238 of SSMA 2015

I haven’t seen the agenda for the meeting, however, if the motion doesn’t clearly state ‘SPECIAL RESOLUTION’ it is probably not valid. I hope it doesn’t come to this and I hope that your offer to abstain from voting on this item will resolve the comment around a potential conflict of interest.

Rod Smith
The Strata Collective
T: 02 9879 3547
E: [email protected]

This post appears in Strata News #200.

It’s an Epidemic – Don’t bury your head in the Sand

This article has been written following a report in the Courier Mail early 2015 which suggested there was an epidemic of concrete cancer in older buildings. Strata Insurance Solutions wanted to provide unit owners with more insight into how this matter is handled from an insurance perspective and also use the opportunity to warn bodies corporate not to bury their heads in the sand if they notice signs of concrete cancer.

Rust stains coming from concrete is a telling sign of concrete cancer, particularly when it is coming from an area near cracked concrete. Concrete cancer is caused when steel embedded in concrete starts to rust. This then causes the steel to expand to up to three times its original volume & crack the concrete, exposing more of the steel and concrete to the elements. Once water penetrates through cracked cement it then rusts and the steel embedded deeper in the cement is then exposed repeating the process until the building becomes structurally unsound.

There are suggestions some Bodies Corporate may be hiding telltale signs of concrete cancer by simply painting over the problem because they are afraid it will reduce the value of their properties. Ignoring concrete cancer only exacerbates the problem because the steel continues to expand and crack the cement, so buildings that are not willing to address the issue as soon as it is noticed are in for a raft of long-term pain.

Concrete cancer is classed as a building defect and therefore needs to be disclosed to insurers as part of your Duty of Disclosure. Failure to notify an insurer of a preexisting defect such as concrete cancer may mean that in certain circumstances the Insurer is entitled to avoid the contract altogether. Or the Insurer may be entitled to reduce the liability in respect of a claim to the amount that would place the insurer in a position in which the insurer would have been if the failure had not occurred or the misrepresentation had not been made.

“If a body corporate committee covers up or fails to disclose to an insurer the existence of concrete cancer and if, as a result of that, a claim on its insurance is denied, then potentially, the committee members may incur a liability for damages. The position varies slightly in each Australian jurisdiction. For example, in Queensland there is a statutory protection for committee members against civil liability provided the act or omission leading to the liability was done in good faith and without negligence. Where non-disclosure was deliberate, or even careless, that protection may not be available. The solution is to avoid risk and ensure proper disclosure is made.” Said Gary Bugden, Principal at Bugden Legal.

We have contacted a number of insurers to get their view on how they approach concrete cancer when it is disclosed to them. Some insurers decline the policy outright, while others will look at the issue on a case by case basis. Of the insurers that consider covering a building that has concrete cancer, overwhelmingly we are told they look more favourably at buildings who can demonstrate they are being proactive about addressing the issue.

Below are things Strata Insurance Solutions recommend Bodies Corporate prepare when disclosing concrete cancer to an Insurer:

  • Reports which outline the extent of concrete cancer & the potential risks posed from its presence.
  • Engineering reports outlining the structural integrity of the building.
  • Plans the Body Corporate has around rectifying the problem, with timeframes. Insurers may consider agreeing to a reasonable time to raise funds on a case by case basis, provided the wait does not significantly increase the insurance risk to the insurer.
  • Long term plans of the Body Corporate to address the concrete cancer ongoing.

Addressing concrete cancer early, despite there being short term pain will benefit all unit owners in the long run. If unaddressed, concrete cancer can render buildings uninhabitable.

If your building has signs of concrete cancer and after getting advice from an engineer, we strongly recommend you seek further advice from your insurance broker or adviser about how to address this from an insurance perspective to ensure you are not exposing yourself down the track.

For further information about dealing with concrete cancer from an insurance perspective, please contact Tyrone Shandiman
Strata Insurance Solutions
P: 1300 554 165

This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisernet Australia AFSL No 240549, ABN 15 003 886 687.

Related Articles

  • NSW: Owners Given New Retrospective Rights to Claim Money Defects
  • NSW: Q&A Remediation of Serious Building Defect

For more information about concrete cancer in strata schemes, information particular to strata insurance or information about strata living in your state or territory, visit Maintenance and Common Property, Strata Insurance OR Strata Information Pages by State.

Looking for strata information concerning your state? For state-specific strata information, take a look here.

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Comments

  1. Avatarmargaret wilson says

    November 28, 2020 at 6:12 am

    Hi been living in my ground unit for 14yrs now and we have been told we all have concrete cancer on our verandahs. There are 16 units in my lot a builder came out gave us a quote for $210,000 to fix concrete cancer on verandahs and repaint. The price to repaint is $63,000. My building is with Strata i am on committee as well. My question is would our insurance come to the party to pay for this defect or do owners have to pay from sinking fund? We had no idea about concrete cancer and had same insurance company for 16yrs. With an access of $5,000 being not owners fault would there be any compensation. Your thoughts thanks.

    Reply
    • Tyrone Shandiman Tyrone Shandiman says

      November 30, 2020 at 10:06 am

      Hi Margaret

      Unfortunately concrete/brick cancer is a standard exclusion in most policies. The Owners Corporation will be responsible for paying for the repairs.

      It will either be the owners corporation (sinking fund) or lot owner who covers the cost depending on who has responsibility to maintain the property that has the concrete cancer. The strata manager is best to provide guidance on this.

      Tyrone Shandiman
      [email protected]
      1300 554 165
      Strata Insurance Solutions
      http://www.stratainsurancesolutions.com.au

      This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances and the specific coverage afforded under their policy wording. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisernet Australia AFSL No 240549, ABN 15 003 886 687

      Reply
  2. Tyrone Shandiman Tyrone Shandiman says

    June 24, 2020 at 6:11 am

    I’ve also found conducting searches yourself can be useful as you get a more detailed feel for the in’s and out’s of the strata. I find that minutes of meetings, defects reports, financial reports and sinking fund forecasts can be very telling of the state of a strata building. Of course, Strata Inspection Reports by professionals who are trained to look for specific issues are always a consideration, particularly if you do not have time to search records at the strata managers office.

    Reply
  3. AvatarJo says

    February 19, 2018 at 12:22 pm

    I have just bought a unit 1 year ago and have just found out that the top unit across from me has severe masenite(?) concrete cancer and the whole loungeroom floor and its balcony has to be taken out and replaced.. This leaves the guy below it without a ceiling thus having to move out. I am terrified that it is going to be $100,000 or more. Can you tell me if one floor like this that has to be removed completely, could be about that price?

    Reply
    • AvatarNikki Jovicic says

      February 21, 2018 at 3:26 pm

      Hi Jo

      Thanks for your question. We have received the following reply back from Glenn Campbell, Building Rectification Services:

      In regards to your concrete cancer concerns, without seeing your unit complex it does seem to be quite an over the top approach.

      In all our 33 years of performing structural concrete repairs, many of which are carried out on some very old beachfront buildings, we have never had to replace an entire floor especially to the internal side of the unit that is usually protected from the elements. This does seem quite extreme and I would suggest you engage an independent engineer to give you their professional opinion. It would be a small price to pay for something that may cost the body corporate hundreds thousands.

      And as for your concern, does it mean all of the units will have this problem, once again this would be very rare to have two units that have that sever concrete cancer.

      Glenn Campbell
      Director
      Building Rectification Services

      Reply

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