A Qld lot owner is concerned due to committee discussions about doctoring records to hide building defects. Frank Higginson, Hynes Legal and Dee Pannell, Body Corporate Matters provide the following responses.
Question: Some members of our Body Corporate want to doctor records to hide issues they believe might affect the value of their properties. Can they do this? If not how can it be prevented?
Answer: As much as I am sure this does happen it is completely unlawful.
Frank Higginson, Hynes Legal:
As much as I am sure this does happen it is completely unlawful.
There are statutory obligations to ensure body corporate records are maintained and there is absolutely no scope to sanitise or selectively include body corporate records on the formal register. Even if a record is not on the formal register it still forms part of the body corporate record and there are abilities to have it provided to the body corporate (and penalties if that does not take place).
I think if it got to the point where it could be proven that a committee member deliberately withheld information for their own purposes like that, it is probably conduct sufficient enough to erode the statutory protection from civil liability. Intentionally keeping information away from a record that it must be included on cannot be in good faith or without negligence. That would then open the door to the committee member being personally liable.
Dee Pannell, Body Corporate Matters:
What are the possible repercussions if owners in a Body Corporate decide to remove or hide details of any defects in either the common property or a unit to protect their property values?
The Body Corporate (a collective of all owners) has certain obligations under the Body Corporate Legislation. Some of these obligations are to ensure that a person intending to buy a Unit is offered some protection. Any issues will be /or should be identified in a search of the body corporate records (not limited to the minutes, correspondence and financial information).
Maintaining the common property
The Legislation places an obligation on the Body Corporate to maintain the common property and individual owners to maintain their lot in good condition. If a building has defects, then this duty to maintain requires those defects to be rectified.
If a third party suffers a loss as a result of defects on common property, the body corporate may face legal action.
Defects also must be disclosed to the insurer to avoid the insurance company rejecting a claim.
Code of Conduct
The three Codes of Conduct under the BCCM Act for :
- Committee Voting Members;
- Body Corporate Managers and Caretaking Service Contractors; and
- Letting Agents.
All codes have similar requirements. For example, they all must –
- Act honestly, fairly and professionally;
- Act with skill, care and diligence;
- Not engage in unconscionable conduct;
- Not engage in fraudulent or misleading conduct.
Sellers obligation when selling their unit
Pursuant to section 223 of the BCCM Legislation, when offering a property for sale, a Seller must warrant (as at the date of the Contract) that to the seller’s knowledge, there are no latent or patent (obvious/not obvious) defects in the common property and their Lot or body corporate assets.
A Seller risks a buyer cancelling the contract or succeeding in a claim for compensation as a consequence of non-disclosure if the Buyer has been materially prejudiced.
This post appears in Strata News #273.
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