These questions about reimbursement for out of pocket expenses relating to water leaks have been answered by Leonie Milonas, PSC Property Lync Insurance Brokers and Brian Rulyancich, StrataTAC.
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- QUESTION: A water cylinder slowly leaked from an upper floor over a number of weeks/months and was not noticed because the apartment below was vacant. Who has to pay for repairs?
- QUESTION: Water leaks have resulted in loss of rent and repair costs. Shouldn’t we be reimbursed for our out of pocket expenses from the insurance and the Council of Owners?
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Question: A water cylinder slowly leaked from an upper floor over a number of weeks/months and was not noticed because the apartment below was vacant. Who has to pay for repairs?
A water cylinder slowly leaked from an upper floor over a number of weeks/months and was not noticed because the apartment below was vacant. It has caused some damage to the exterior of the building.
The insurance company will not pay for the repair due to the damage being “gradual” and not from a sudden, one-off event. Who has to pay for the building damage rectification, the lot owner or the Strata?
Answer: The strata company would be responsible to rectify and pay for the damage, however there could be a case for recovery of those costs.
The question does not stipulate whether the “leaking” water cylinder is located within a unit on the upper floor or external on the common property wall. This could have a bearing on who is ultimately responsible for the rectification costs.
As it is an apartment complex the exterior would be normally common property, however, I am aware of a multi storey complex in Perth where the boundaries of the lot are such that the external lots have their boundaries to the external walls of the complex. On my initial assumption, the strata company under section 35(1)(c) has the responsibility to repair the damage. If the water cylinder was for the use of the upper apartment but located on common property it would be deemed under section 35(1)(c)(ii) personal property vested in the strata company and as such the responsibility of the strata company to maintain. Note it is not the responsibility of a tenant to notify the strata company of any issues. That responsibility rests with the lot owner/property manager.
If the water cylinder was within a unit on the upper floor, the owner would have a responsibility to maintain and repair Schedule 1 By-law (1)(b) and could be held accountable for any damage incurred to property. If the cylinder was on common property the strata company has a responsibility to maintain, service, repair and renew and inspect common property.
Without further information my initial answer would be the strata company would be responsible to rectify and pay for the damage, however, there could be a case for recovery of those costs. Additional information would be required.
This post appears in Strata News #332.
Brian Rulyancich
StrataTAC
T: 0428 970 067
E: [email protected]
Question: Water leaks have resulted in loss of rent and repair costs. Shouldn’t we be reimbursed for our out of pocket expenses from the insurance and the Council of Owners?
I have a common interest with my son in one of 14 apartments in Fremantle. The apartment is rented out as an Airbnb.
Mid last year, a renter rang complaining that the power kept tripping. My son went down to investigated and discovered the ceiling was leaking in the kitchen lounge. We refunded the renters money and contacted the Strata. Initially, the Strata were extremely helpful and organised an electrician to attend quickly and then return on to finalise repairs.
On this follow up visit from the electrician, they discovered a water leak. A plumber was organised and the leak was repaired. We received the electrical safety certificate. The whole process ended up taking around two weeks.
We made a claim from the insurance for compensation for lost income for the two weeks, as we were unable to let the unit until the repairs had been completed.
The insurance company agreed to reimburse only part of the lost income and this doesn’t seem fair to me.
Also, when the plumbers were fixing the ceiling in the lounge and kitchen they discovered the ceiling above the shower was leaking. This was not related to the same burst pipe. We were advised it was a leaking shower from the unit above. This was finally fixed about one month later. The Strata advised they would submit the invoice to the Council of Owners for their consideration. Weeks later we are still waiting for an update.
From my understanding, all walls, floors and ceilings are common property and should be maintained by the Strata. Is this correct?
Answer: You are entitled to have the decision reviewed by the insurer’s Internal Disputes Resolution Team.
As I am not your insurance broker I am unable to comment about the specifics of your claims, other than to offer some general information about your rights and ideas on how to proceed.
Loss of Rental Income
Your insurer’s Product Disclosure Statement, as you would be aware, provides reimbursement following an insurable event accepted by the insurer, for Loss of Rent or Temporary Accommodation, when your lot /common property is made unfit for its intended purpose.
Under the Financial Services Review Act, you are entitled to have the decision reviewed by the insurer’s Internal Disputes Resolution Team. See attached an extract from the Longitude PDS for your information.
Leak in the bathroom
As this involves another Lot Owner’s shower recess area, such as waterproofing or re-grouting etc., sometimes it is a little more of a complex matter for the Council of Owners to work through depending on your strata plan and boundary definitions etc.
This part of your query relates to strata management, not insurance and I would suggest you speak to your Council of Owner members or your strata manager to understand the procedure and steps involved to get this matter resolved. Generally, the cause of the water ingress to your ceiling has to be fixed before repairs to the ceiling are undertaken.
Hopefully, this is of assistance to you or maybe contact your strata’s insurance broker for more information.
Leonie Milonas
PSC Property Lync Insurance Brokers
T: 1300 127 503
E: [email protected]
General Disclosure
The responses to the above questions are prepared for informational purposes only, and is not legal advice and should not be relied on as legal or insurance advice. You should consult with a qualified insurance or legal advisor.
This post appears in Strata News #269.
Have a question about reimbursement for water leak expenses or something to add to the article? Leave a comment below.
Please note this advice was provided prior to the proclamation of the new strata title amendments and will be updated in due course.
Read next:
- WA: Maintenance Planning and Insurance: The Strata Titles Amendment Act 2018 (STAA 2018)
- WA: Q&A Plumbing Problems in My Unit. Who pays for Investigating the Cause?
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I have a property which was rented to a tenant in a Strata Title complex in Sydney. Approx 2 years ago water entered into the lounge room and wet the carpet following a major down pour of rain. I had some carpet dryers brought in and advised the Strata Committee and the Strata Manager of the problem. They did nothing. Heavy rain again caused water to enter the unit. Again I paid to have the carper dried as best they could. More rain more wet carpet. The tenant reported mould on the carpet and the adjoining walls and gave notice.
I again reported it and the Strata Manager said that they would now attend to to the problem. I asked for compensation. They advised that the Body Corporate Insurers do not cover a lot owners carpets. I went to my insurer who said that it was the Body Corporate Insurers responsibility because the water has entered from outside (Common Property). So back to the BC Insurers who have refused to pay. The BC Manager and the Committee failed to fix the problem (in fact didnt even try to fix the problem until later last year and are still doing some remedial works.
In the meantime I paid to have the carpet removed and put a water resistant vinyl down. I then re-let the Unit. I did tell the tenant there had been water problems and she was very understand as her lounge room flooded on several occasions and damaged some of her furniture. I paid out $900 in damages and continued to complain. The tenant then said she required a $100 pw rent reduction until the problem was fixed or she would move out.
I am still battling between the 2 insurers and over 2 years out still have no joy.
What can I do???
many faults such as the above may be covered by the builders 6 year warrenty as was a recent one in coogee where a builder had to replace window frames completely to a large number of apartments due very faulty instalation. I t pays to check if the 6 yesr period still covers your situation and insurance may not cover builders faults
Not sure what my position is on this matter so where possible can I get some advice. I recently purchased a strata title property and it had damage, pillowing, to the ceiling. I got a plasterer in to give me a quote to get it fixed and he suggested that he thought it was actually an insurance job because of the extent of the damage he felt that there must have been a leak at some point. I contacted the strata and asked what I could do in relation to the ceiling. They were very helpful and said they’d contact the insurance company and then get back to me. In a little over a week I was told that the insurance company had excepted the claim and they had got a quote which the secretary of the strata would forward on to me. When I got the quote it was only for painting the ceiling nothing about repairs to the ceiling. On the painters quote he specifically points out that the ceiling required repairs before he could carry out his work.
I contacted the secretary but they refuse to discuss it so where do I go from here. Do I just pay to get it repaired because I haven’t moved in as it is an extensive area
Regards Marion Wallace
Thanks for the clarification, Leonie.
It does take time and owners – remember that members of the council are volunteers.