NSW: Section 106: The 6-Year Committee Liability Trap

Spring is traditionally the busiest time of year for New South Wales strata schemes. As the warmer weather arrives, buildings naturally shake off winter, and committees turn their attention to sprucing up the property, tackling deferred projects, and preparing for the upcoming AGM season.

Perhaps it is a slow-developing waterproofing leak on a balcony wall discovered during spring inspections, or a patch of rising damp in the basement. A committee looks at the budget, votes to defer the fix until next financial year, and breathes a temporary sigh of relief.

Except under NSW strata law, that relief is an illusion.

The Non-Negotiable Duty of Section 106

Under Section 106 of the Strata Schemes Management Act 2015, an owners corporation carries a strict, statutory duty to properly maintain and keep common property in a state of good and serviceable repair.

This is not a discretionary checklist item or a matter for committee vote. An owners corporation cannot lawfully vote to opt out of repairs simply because funds are constrained or a major capital works project is looming. Delaying or ignoring common property repairs transforms an administrative delay into an actionable breach of statutory duty, exposing the scheme to substantial legal liability.

The Extended Six-Year Risk Window

The expansion of the limitation period under Section 106 means lot owners now have up to six years from the date they first become aware of a loss to commence legal proceedings against an owners corporation.

This extended window fundamentally alters a building’s risk profile:

The Long Tail of Historical Liabilities: Unresolved maintenance requests buried in past records or chronic balcony leaks reported years ago do not expire when a committee changes over. They remain active legal exposure.

Compounding Damages: Over six years, minor defects cascade into major structural damage, interior destruction, and significant claims for alternative accommodation or lost rental income—all of which the owners corporation may be legally mandated to pay.

The Erosion of Committee Defences: Committees often operate under the false security that silence from an owner equates to acceptance. The six-year runway gives owners ample time to seek formal legal counsel and pursue high-value compensation in the Tribunal.

Protecting the Owners Corporation This Spring

Spring cleaning should extend far beyond gardens and foyers. To mitigate long-term exposure and protect the building’s financial health, strata managers and committees must take a rigorous approach to governance: