NSW: Q&A Who is responsible for water damage in a strata unit?

Lot owners from NSW are wondering what to do about water damage in units. Who is responsible for water damage caused by recent weather events or on a unit ceiling caused by the apartment upstairs? What can be claimed on insurance and who pays the excess?

Table of contents:

• QUESTION: We recently purchased a unit with original floorboards. They are on joists, not floating. When we lifted one of the floorboards, we discovered it was water damaged. Does the strata insurance cover this?
• QUESTION: My apartment flooded due to a lack of maintenance from the OC. Is it reasonable to hold the OC liable for the damage?
• QUESTION: During strata insurance work to my lot, items were damaged. I’m to replace the items and submit receipts for reimbursement from the strata trust. Who owns the items?
• QUESTION: Although our strata property has pumps installed to alleviate damage from excess water, the recent weather events caused unit garages to flood. Can the owners corporation be held liable for the water damage of goods in the garages?
• QUESTION: Two lots have a rooftop terrace. Large potted trees on the terrace have cause water ingress into the units below. Who is responsible for the damage caused by the water ingress?
• QUESTION: The apartment upstairs had some water leakages which has damaged my apartment. Am I responsible for repairs to the damage inside my unit?
• QUESTION: Who is responsible for the water damage on my ceiling and the white goods in the kitchen caused by the apartment upstairs? Their laundry upstairs is in a cupboard and is not plumbed in properly. This has flooded my kitchen numerous times.

Question: We recently purchased a unit with original floorboards. They are on joists, not floating. When we lifted one of the floorboards, we discovered it was water damaged. Does the strata insurance cover this?

Answer: In this case, the strata insurance policy is the appropriate policy to claim against, however….

If the floorboards are not floating—meaning it is not flooring that is held in place by its own weight and perimeter skirting—then they are considered permanent flooring. Permanent flooring is typically glued or nailed to the subfloor. In this case, the strata insurance policy is the appropriate policy to claim against.

However, whether the damage is covered will depend on the cause. In order to be claimable, most strata policies require water damage to be sudden and accidental. Common exclusions include wear and tear, gradual deterioration, and long-term exposure to moisture. If the damage has developed slowly over time, it may not be covered under the strata policy.

For further insights into water damage claims and how insurers assess these situations, you may find the LookUpStrata Water Damage Webinar helpful. Click here to watch.

Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
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 Advisenent Australia AFSL No 240549, ABN 15 003 886 687.

Question: My apartment flooded due to a lack of maintenance from the OC. Is it reasonable to hold the OC liable for the damage?

My apartment recently experienced water damage due to overflowing gutters during heavy rain. The property manager and I submitted a claim for $1400 to my landlord insurer to cover the cost of lifting, drying, and deodorising the damaged carpet. The insurer denied the claim because a plumber’s report linked the flooding to clogged gutters with leaves and debris. We believe the lack of gutter maintenance by the owners corporation (OC) caused the issue. The OC has now confirmed they will clean the gutters every six months.

Is my claim against the OC for reimbursement of the repair costs reasonable given the situation?

Answer: Pursuing a claim on the contents insurance policy is standard procedure. If the contents insurer believes the OC is responsible, they can pursue a claim against the OC.

In situations where a property manager and a tenant lodge a claim for damages caused by the owners corporation’s failure to maintain common property, such as clearing gutters, there are several important steps to consider.

First, it is advisable to pursue a claim on the contents insurance policy. If the contents insurer believes the owners corporation is responsible for the damage, they can pursue a claim against the owners corporation. This is typically the standard procedure followed in such cases.

Leaks from common property, including issues like blocked gutters, are generally covered by contents insurance policies. It seems unusual for the contents insurer to deny the claim due to a common property leak, therefore, understanding the specific reasons for the denial of the claim is crucial.

I first recommend asking for a formal denial letter that clearly outlinies the reasons for denying your claim. Make sure this letter references specific clauses in your insurance policy. If you believe the insurer has not provided sufficient grounds to deny your claim, you should consider challenging the decision via the insurer’s dispute resolution process.

Alternatively, if the owners corporation is believed to be liable, a claim can be pursued against them through the processes advised by Fair Trading: Strata disputes.

Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
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 Advisenent Australia AFSL No 240549, ABN 15 003 886 687.

This post appears in the August 2024 edition of The NSW Strata Magazine.

Question: During strata insurance work to my lot, items were damaged. I’m to replace the items and submit receipts for reimbursement from the strata trust. Who owns the items?

I recently had strata insurance works to my lot after water ingress from a flood. During the works, the strata insurance builder damaged several items, such as my oven, sink, furniture and built-in joinery.

I claimed replacement costs. I’m to buy the items and claim reimbursement from the strata trust as they must approve the works or replaced items and then claim tax. As these items are taxable to the trust, who owns them?

Answer: The rightful owner of the mentioned items, which are part of a lot, remains the lot owner, and these items are considered the lot owner’s property.

It appears the insurer has settled the owner’s corporation for the damaged items. If the owners corporation is registered for GST, the insurer will settle the claim net of GST, as the owners corporation can later claim back the GST amount.

To facilitate the GST claim, the owners corporation requires invoices to be provided. Therefore, they have requested you to submit invoices before reimbursing the funds.

It is important to note that the insured building, including the oven, sink, and built-in joinery, is covered under the strata insurance. However, your furniture is not covered under the strata insurance. Since the insurer’s builder caused damage to your personal property, the insurer appears to have covered these costs and settled the claim in a similar manner as insured items, deducting GST and making the payment to the owners corporation.

Regarding the issue of ownership, even though the owners corporation is paying for the items to facilitate an insurance claim, the rightful owner of the mentioned items, which are part of a lot, remains the lot owner, and these items are considered the lot owner’s property.

Tyrone Shandiman
Strata Insurance Solutions
E: [email protected]
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 Advisenent Australia AFSL No 240549, ABN 15 003 886 687.

This post appears in the September 2023 edition of The NSW Strata Magazine.

Question: Although our strata property has pumps installed to alleviate damage from excess water, the recent weather events caused unit garages to flood. Can the owners corporation be held liable for the water damage of goods in the garages?

Our townhouse block has a driveway sloping into the building in one direction and a carpark entry/exit sloping in the other direction, forming a wide “V” shape at the security roller door junction of the two.

Two townhouse garages are at this junction, and the drains at this junction have two large pumps in order to remove excess if the drain at this junction overflows. The current extreme weather has resulted in a number of occasions where the pumps cannot cope with the water and the garages of the two units have had heavy water ingress at ground level, causing damage to items stored in the garages which I imagine would not make us unique at the moment. The building is approx 18 years old. Is the OC responsible for having the garage areas waterproof from the excess ground run off when the drains are not blocked but simply cannot cope in unusual circumstances such as at present, and is it responsible for providing on or off site storage to avoid damage to owners goods stored in their garage by choice?

Answer: So long as the building complies with building codes at the time of construction and does not have a regular problem with water ingress, the owners corporation is not responsible to upgrade the building to protect the garage contents in extraordinary weather events.

This is a great question and one I am sure is very topical at present given the incredible volumes of rain we have seen recently.

To answer this question, here are a few assumptions we will have to make.

We need to assume that the design and construction of the townhouse complex was built to code specification at its inception. At the very least it would have been signed off by a certifier at the time of completion as meeting requirements for drainage at that time.

We also have to assume that the owners corporation, in this instance, has not failed its duty to properly maintain the building, gutters, drain systems, Pumps, etc.

As the NCC and Building Codes are not usually retrospective, building codes today may likely not apply to your particular building.

Given that you have a drainage system in place plus a backup pump set for when the drain does not cope, it would seem reasonable that the owners corporation has taken reasonable steps to prevent damage to owners lots from water ingress under normal circumstances/ weather events.

Because we have experienced unusual and largely unprecedented weather events, these volumes of water would likely exceed many drainage system capacities through affected areas at no particular fault to the design or construction of the buildings.

We have seen council constructed stormwater systems erupt as entire streets never before flooded have gone underwater, so in these conditions, it is no surprise that residential drainage systems (commonly box drains in driveways) have not coped well.

Regarding responsibility for weatherproofing or waterproofing the garages and their contents, so long as the building complies with building codes at the time of construction and does not have a regular problem with water ingress, the owners corporation is not responsible to upgrade the building to protect the garage contents in extraordinary weather events, nor is it responsible to organise personal storage for owners contents during such an event. Most occupants would have a level of contents insurance that covers their personal possessions inside your lot/ unit during flooding, fire, theft etc.

A very simplistic way to look at insurance responsibilities in strata is as follows:

If you were to pick up and shake your unit, whatever falls out is your responsibility as an owner to the insurer – the fridge, the TV, your kitchen, your artwork, your car, your cat etc is all your responsibility.

Balconies, roofing, doors, windows and all building-related elements are generally the responsibility of the owners corporation in a regular NSW Strata Plan.

Dakota Panetta
Solutions in Engineering
E: [email protected]
P: 1300 136 036

This post appears in Strata News #563.

Question: Two lots have a rooftop terrace. Large potted trees on the terrace have cause water ingress into the units below. Who is responsible for the damage caused by the water ingress?

The rooftop-terrace areas of our building in NSW are occupied by two units and the Land Registry Services recently advised that these terrace areas are the property of the two resident unit owners.

Several other lot owners contend that large pot plants holding large trees and an irrigation system on the rooftop terraces have damaged the rooftop tiling leading to water ingress and damage to the lots directly beneath the rooftop lots. Hitherto, repairs to the rooftop terrace areas has been borne by the owners corporation.

Should the owners of the rooftop terrace lots pay for rooftop repairs and compensate the lower-level lot owners for any damage caused by water ingress?

Also, how can I word a motion to pass a by law distinguishing between common property and lot-owner responsibility for care and maintenance of these rooftop-terrace areas?

Answer: Generally insurers do not cover the cost associated with fixing a leak (maintenance) but they do cover consequential water damage.

The first consideration is whether the water damage claim is covered by insurance or not.

Generally insurers do not cover the cost associated with fixing a leak (maintenance) but they do cover consequential water damage. If there is an insurance claim the insurance policy will cover the damage to lower level lot owners.

Outside of an insurance claim, there can be a number of factors that determine who is legally responsible for repairs & maintenance of property – this can include:

1. Who owns the property;
2. Is someone other than the owner legally responsible for repairs (e.g. because of negligence or a breach of the Strata Management Act).

With regard to a motion which between common property and lot owner responsibility for care and maintenance of these rooftop terrace areas, you should seek advice from your strata manager (if you have one). My unqualified opinion is the Strata Management Act & your strata plans already do this and you need to be careful not to write a bylaw that contravenes the strata management act.

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 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.

This post appears in the October 2020 edition of The NSW Strata Magazine.

Question: The apartment upstairs had some water leakages which has damaged my apartment. Am I responsible for repairs to the damage inside my unit?

I own an apartment in NSW which is tenanted and agent managed.

The apartment upstairs had some water leakages which has damaged both the duct connecting the floors as well as the walls, tiling and cupboards in my kitchen. The strata agent says that I am responsible for repairs to the damage inside my unit. The cost is about $3K. I can’t believe that this is correct.

Answer: You should not be liable for damage caused to your apartment through no fault of your own.

You should not be liable for damage caused to your apartment through no fault of your own.

Your strata managing agent should be contacting upstairs and arranging an inspection to determine the cause of the damage/leak – if it is a defect in the common property, the Owners Corporation should rectify it and repair all the damage caused to your lot at its own cost or through its insurance (if it is an insurable event). If the upstairs residents have carried out renovations and this is determined to be the cause – they should be held liable.

If no-one cooperates with you, it is open to you to apply for mediation before seeking Orders from NCAT.

Leanne Habib
Premium Strata
P: 02 9281 6440
E: [email protected]

This post appears in Strata News #401.

Question: Who is responsible for the water damage on my ceiling and the white goods in the kitchen caused by the apartment upstairs? Their laundry upstairs is in a cupboard and is not plumbed in properly. This has flooded my kitchen numerous times.

My question is in regards to flooding and water damage on my ceiling from the laundry in the apartment upstairs.

Who is responsible for the water damage on my ceiling and the white goods in the kitchen?

I live in a ground floor apartment in a small strata scheme.

Upstairs they have a kitchen / laundry that has flooded my kitchen numerous times.

The owners of the apartment live upstairs, the laundry upstairs is in a cupboard and is not plumbed in properly, nor has a drain or waterproofing.

Our building was built in the 1940’s, I’m not sure when the laundry cupboard was added.

Answer: As a general proposition, the upstairs people should be liable for their shoddy works which have caused you loss and damage.

There are many matters to be considered here:

1. Did the upstairs owners have their works approved?
2. Was a by-law created for their works?
3. Do you have contents insurance?
4. Do you have a strata manager?

As a general proposition, the upstairs people should be liable for their shoddy works which have caused you loss and damage.

You should contact them and seek their co-operation in compensating you and properly finishing the laundry to avoid future flooding. If they refuse to rectify their works you may wish to make an application for Orders to NSW Civil & Administrative Tribunal but you would need to apply for Mediation through Office of Fair Trading first.

Leanne Habib
Premium Strata
P: 02 9281 6440
E: [email protected]

This post appears in Strata News #184.

Read Next:

• NAT: Q&A Water Damage Insurance Claims and The Excess in Strata Properties

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

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