NSW: Q&A Common Property Defects and Reimbursement for Repairs

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The following questions are from New South Wales strata lot owners asking about reimbursements for repairs required due to common property defects. Thank you to Leanne Habib, Premium Strata and Tyrone Shandiman, Strata Insurance Solutions for providing the following responses.

Question: Water damage was caused to a lot owner’s floating floor boards from a common property defect. Aren’t internal floor coverings the responsibility of the lot owner?

We recently had an owner put in a claim for the owners corporation to pay for damage to their floating wooden floor within their living area. The damage was due to water leakage.

After consulting with our Strata agent they advised that this is now a ‘grey area’ in NSW and that the owners corporation may be liable.

This is news to me as I thought it was clear cut. I thought the internal floor coverings; carpet, floating and fixed wooden floors that were installed by past or present owners are the responsibility of the present owner and should be covered by their own household insurance.

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Answer: It is important to understand the difference between “responsibility to insure” and “responsibility for damage”.

I think it is important to understand the difference between “responsibility to insure” and “responsibility for damage”. It is my view this may be the cause of the misunderstanding.

“Responsibility to Insure” is covered by Section 161 (4) Strata Schemes Management Act 2015 and outlines that temporary floor coverings are not required to be insured under a strata policy. Subsequently, strata insurers will exclude cover for floating floors.

Insurers have however started providing an optional benefit to cover floating floors. This muddies the waters somewhat as contents/landlords insurance which has traditionally been the policy to insure floating floors now covers fixtures that are not insured by the strata policy. In the event of a claim for damage to floating floors, if an owner tries to make a claim on their contents/landlords insurance policy, the contents insurer may require confirmation that the strata insurer is declining to provide cover. If the strata insurance policy has the optional benefit covering floating floors selected and you contact the insurer for a decline letter. The insurer technically can not decline a claim for something they cover. For this reason, we caution owners corporation clients about taking the floating floors optional benefit because it can have the unintended consequence of forcing an owner to claim on strata even if their preference is to claim on their contents/landlords insurance.

“Responsibility for damage” or a negligence claims against the owners corporation are different from any property damage claim. Strata policies have public liability insurance which is designed to provide cover for claims for property damage they become legally liable for. If the leak was from the owners corporation property (such as a leaking pipe the owners corporation are responsible for) and the owner can demonstrate negligence on the part of the owners corporation or a legal responsibility for the damage, then a public liability claim can be considered by the insurer. The insurer will either defend the claim if they feel there are reasonable grounds to do so or they will settle the demands.

This post appears in Strata News #306.

Tyrone Shandiman
Strata Insurance Solutions
T: 07 3899 5129
E: [email protected]

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.

Question: Our hardwood floors have suffered major water damage due to common property defects. Should the Body corporate reimburse out of pocket expenses for accommodation and food while we vacate the property for repairs?

We have had major water damage occur to a hardwood floor laid on battens on a slab as part of the original build in a 10 year old NSW town house complex.

The hardwood floors are recognized as Body Corporate responsibility as the damage is due to common property defects.

For reasons too convoluted to go into, insurance is refusing to pay out.

Body corporate are willing to pay for the repair, though I will need to vacate my property for at least a week while the floor is replaced.

Does Body corporate have an obligation to reimburse me for out of pocket expenses to house and feed my family for a week while we vacate the property for repairs?

Answer: The accommodation should be recoverable, but it is unlikely that the costs of food etc would be reimbursed.

If the water ingress can be construed as a failure on the part of the owners corporation to properly repair and maintain the common property, then under Section 106(5) of the Strata Schemes Management Act 2015 (NSW):

(5) An owner of a lot in a strata scheme may recover from the owners corporation, as damages for breach of statutory duty, any reasonably foreseeable loss suffered by the owner as a result of a contravention of this section by the owners corporation.

If the above clause is applicable, in our view, the accommodation should be recoverable, but it is unlikely that the costs of feeding etc would be, given that you must feed your family wherever you live ie the requirement to feed your family has not arisen because of any breach of the owners corporation. Bearing in mind too, that you must mitigate your losses, so rather than stay at eg a 5-star hotel and eat room service every night, we recommend you find a serviced apartment of similar quality in the vicinity of your existing apartment.

This post appears in Strata News #300.

Question: Our bathroom’s waterproofing membrane has failed and is causing damage to the lot below. Should the Owners Corporation be responsible for all repairs, as these are only needed due to common property defects?

Our bathroom is the original bathroom and the waterproofing membrane has failed and is causing damage to the lot below.

The Owners Corporation’s contractor has advised that to comply with the current building codes, the entire bathroom needs to be stripped out, the waterproofing membrane replaced and the bathroom tiles and fixtures renewed.

As the bathroom and waterproof membrane are original and there is nothing wrong with the tiles or fixtures, shouldn’t the Owners Corporation be responsible for the cost to replace these? The repairs are only needed due to the common property defects and so the Owners Corporation can maintain the common property membrane. Is this correct?

The current bathroom is tiled in marble and we have even advised we will accept a standard white tile instead of requiring the like for like marble tiles, as this will keep the cost lower.

What bylaw or part of the legislation would we be able to quote in regards to this? Who is responsible? The property is about 30-40 years old.

Answer: There is a very similar 1999 strata titles case.

There is a 1999 case where water had leaked into two lots below another lot so the owners corporation removed two rows of tiles to effect membrane repairs. The owners corporation was insistent that its obligations extended only to replacement of the 2 rows of titles it had removed. The Owner, however, wanted his entire balcony retiled.

An Adjudicator ordered that the owners corporation had to retile with tiles that matched as closely as possible in appearance and value so as not to detract from the appearance of the balcony floor or negatively impact on the value of the lot. Further, if reasonably matching tiles were not available and those non-matching tiles might detract from the appearance of the lot, the owners corporation was to retile the whole balcony.

This post appears in Strata News #266.

Question: Due to a common property defect, my tiles were damaged in an area on my verandah. As the tiles could not be matched, the whole space must be retiled. Should the OC pay for all work?

My veranda incorporates a steel post which structurally supports the roof above. The post was defective in that it had no ‘weep holes’ to allow condensation to flow out. The water resulting inside the post eventually rusted the base of the post and, destabilised the tiles and tile bed.

In fixing this common property defect, the tiles could not be matched therefore the veranda had to be retiled.

The Strata management advised that this was not their responsibility even though the damage was consequential to the defective pipe and only required replacement due to damage caused by the common property defect.

The strata manager said that they may be responsible for the portion of the tiles that were damaged by the pipe but not the whole retiling job. I note again that the tiles could not be matched so there was no alternative other than full replacement.

Can you advise my rights to recover costs?

Answer: There is a strata titles case very similar to yours.

There is a strata titles case concerning a common property defect (Denning v The Owners – Strata Plan No. 11318 [1999] SA/99/038) which states that the duty of the Owners Corporation to repair tiles on a balcony, in a context similar to yours, was, either to match new tiles as closely as possible in appearance and value to the existing tiles so as not to detract from the appearance or value of the lot OR in case very similar tiles were not able to be sourced, then the owners corporation would have to retile the whole balcony floor.

This post appears in Strata News #220.

Question: The floor in a lot’s kitchen has to be repaired because of concrete cancer. The lot owner now wants the owners corporation to pay for a new kitchen.

Who is responsible for a kitchen in a unit? The floor in a lot’s kitchen has to be repaired due to common property defects, specifically because of concrete cancer. The lot owner now wants the owners corporation to pay for a new kitchen. The original kitchen was 30 years old! Where do we stand?

Answer: The Owners Corporation would need to address concrete cancer and then reinstate the kitchen with like for like.

It sounds like the kitchen is original. Subject to any by-laws applicable to the scheme and any notations on the strata plan, the general position is that the floor tiles, any membrane and the structure of the concrete slab are all common property, and, therefore, the responsibility of the Owners Corporation.

The Owners Corporation would need to address concrete cancer and then reinstate the kitchen with like for like. Any upgrade or superior finishes would be at the cost of the individual lot owner.

Question: One lot owner has put in a claim for over $6000 from the owner’s corporation for bathroom renovations.

What are the responsibilities of Strata Committee members in relation to maintenance work? One lot owner has put in a claim for over $6000 from the owner’s corporation for bathroom renovations. Is this allowed? Who has the right to view the bathroom in question? All lot owners, or just the Strata Committee members?

Answer: If the owner alleges the renovations were required due to common property defects, then such defects should have been notified to the owners corporation.

Bathroom renovations require a by-law under the legislation – which the owner appears not to have obtained. If the owner alleges the renovations were required due to common property defects, then such defects should have been notified to the owners corporation.

The owners corporation should not be liable to foot the bill unless there is compelling evidence of a defect in the common property necessitating a full bathroom renovation. This does not seem to be the case. You should seek legal advice on this one. Before you can access the lot, you will need the relevant owner’s consent.

Question: A lot owner wants reimbursement for repairs required due to common property defects, although they did not follow the correct process. Should the Owners Corporation appease this lot owner?

We had a motion passed after a discussion held at our last years AGM.

See below:-

MOTION

If an owner authorises work on common property and bypasses the Strata Committee and Strata Manager then the Owners Corporation will not reimburse the owner for such works. All requests for maintenance must be channelled through the Strata Committee and the Strata Manager who will then issue a work order to a certified contractor.

The motion will then either be CARRIED/AMENDED or LOST

This was carried by the Owners Corporation.

Since this was passed at the last AGM, we had an owner get work done on her lot. The work was necessary due to a common property defect and was carried out by their own contractor. They are now demanding a reimbursement for the cost of the work.

Just prior to this claim, another owner wanted the same issue caused by the common property defect repaired. They requested the issue to be repaired through the strata manager and after confirming it was strata responsibility, the job was done at strata’s costs. This owner followed the correct process, as per the motion.

The owner who has not followed the process and has had the work done outside of this motion is causing all kind of demands because the compliant lot owner was compensated by strata.

We passed this motion because we have previously had owners being reimbursed at a later date for works that have not been channelled through the strata manager and strata committee.

Should the strata committee go against a motion passed at an AGM by the Owners Corporation to appease this owner?

Answer: We would not entertain reimbursement until such time as the owner demonstrated actual costs, the qualifications of the workers, the necessity for the works, the insurances/warranties obtained.

This is a difficult question because the motion passed implies that an owner has authority to issue work orders for work on the common property (which they do not) but if they do so, they will not be reimbursed. While we understand this was intended to dissuade lot owners from by-passing the proper channels for common property repairs, Section 111 clearly states that owners must not carry out work on the common property without the proper approvals. Further, Section 126 gives the Tribunal powers to order an Owners Corporation to consent to common property repair works carried out by an owner and which directly affects the owner’s lot.

The concern for the Owners Corporation is that where a lot owner carries out the work, the Owners Corporation does not obtain the benefit of any warranties for works carried out. Also, it is not aware of the qualifications of the contractor carrying out works on the common property and there is a possibility that the insurances of the Owners Corporation may have been compromised.

All that said, we cannot give you legal advice. However, we are of the view that the by-law is confusing and could be better drafted.

In terms of the current issue at hand with the lot owner demanding reimbursement, again while we cannot give you legal advice, we would not entertain reimbursement until such time as the owner demonstrated:

• actual costs
• the qualifications of the workers
• the necessity for the works
• the insurances/warranties obtained.

Ultimately, and because of the strict liability of the Owners Corporation to properly repair and maintain the common property, the owner could make application to NSW Civil & Administrative Tribunal and recover from the Owners Corporation damages for the Owners Corporation’s breach of statutory duty Section 106 (5).

Question: Who is Responsible for Sanding Polishing Floorboards?

I wonder if you can clarify a strata question that is very grey with regards to my floorboards.

Our building in Sydney NSW was completed on the year 2000. Each townhouse has a section of floorboards in the lounge room.

Our Strata manager says the floorboards are not common property and are the owners responsibility.

This contradicts the following – last year we had some rectification works due to common property defects relating to waterproofing and some of the townhouses did have some water damage to their floorboards and the strata paid for the repairs to the floorboards.

When I asked the strata manager about sanding polishing floorboards, they said NO as these are the owner’s responsibility. When I asked the Executive Committee, the chairperson said that because the other units had damage caused by the reification works of the common property defects, the owners corporation had to pay for them.

I find this inequitable and am really confused. What do I do?

Answer: You need to confirm whether your flooring is common property or lot property

It is not uncommon for the Owners Corporation to repair lot property resulting from damage caused by common property defects. Therefore, whilst the flooring may not be common property, the Owners Corporation would still be responsible to repair flooring where their property has caused the damage.

However, to determine if your flooring is common property or lot property, and which party is responsible for general repair and maintenance of the flooring, the following should be confirmed:

1. Type of timber flooring , hard flooring or floating floors
2. How the timber flooring is installed, is the flooring attached to the common property in any way, i.e. screwed, glued to the floor slab.
3. Is the timber flooring part of the original building, i.e. installed at the time of construction and not replaced or altered by an individual owner(s) since construction
4. Are there any special bylaws that transfer the responsibility of maintaining the flooring to either party, the individual Owners or the Owners Corporation

In summary, if the flooring was installed at the time of construction, has not been altered since by an individual owner(s) and is affixed to the common property floor slab within your lot, and there is no special by law in place to determine who is responsible, the flooring will be deemed to be common property and the Owners Corporation would be responsible to repair and maintain. Please note there is an argument excluding the polish/lacquer, which is lot owner responsibility as it is our view that the polish sits within your lot space. It is the upper surface of the floor and the starting point of your cubic airspace in as much as you own the painted surface of the common property ceiling in your lot.

Therefore, in practice, while the Owners Corporation is responsible to repair and maintain the floorboards, any cost for application of polish would be payable by you.

In conclusion, further assessment of the need for re-sanding will assist in determining who’s proper responsibility the polish is, as there are alternate arguable views regarding the responsibility to repolish the flooring.

This post appears in Strata News #211.

Leanne Habib
Premium Strata
P: 02 9281 6440
E: [email protected]
You can connect with Leanne & Premium Strata on Facebook, Twitter & LinkedIn.

These articles are not intended to be personal advice and you should not rely on it as a substitute for any form of advice.

Have a question about common property defects or something to add to the article? Leave a comment below.

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