These questions are about insurance and reimbursement for out of pocket expenses relating to water leaks in strata properties.
Jump directly to the QUESTION you are after:
- 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?
- QUESTION: We have a shared water meter and divide usage between 4 units. One lot owner is refusing to pay their portion. How do we handle this situation?
- QUESTION: Should a damaged water meter be covered by the Building Insurance or the Sinking Fund and not individually by the owner?
- QUESTION: A roof leak in the strata car park has caused significant damage to my car, corroding paint work, as well as corroding and staining accessories that I have had added to the car. Who is responsible for the cost of the repair?
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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.
Question: We have a shared water meter and divide usage between 4 units. One lot owner is refusing to pay their portion. How do we handle this situation?
We live in a strata complex of 4 units. Units 1 and 2 are privately owned and we own Units 3 and 4.
We share one water meter and divide the water usage between us. However, Unit 2 has not been in their Unit for most of the last 2 years and I have not been charging them for any water.
Just recently in the last few months, we noticed Unit 2 owners have been returning quite frequently and therefore I charged them a share of the water usage. Now they do not want to pay. Also, we do not have a strata levy bank account, we each pay as the bill is due.
Is there something in the legislation saying the strata owner is responsible to pay for water from a shared water meter regardless of occupancy, or do you have any advice on how I should proceed with the matter?
Answer: In order to settle the payment you would have to apply to SAT.
Unless you have meters that say unit 2 has used ‘xyz’ amount of water, the common property water bill should be divided by what is agreed upon by the strata company – which I would suggest is by unit entitlement or simply divided by the number of units.
In order to settle the payment, you would have to apply to SAT. Which might not be worth the amount of money in question.
My best suggestion would be to look into installing separate water meters. Take a look at this information from Water Corp with the further necessary forms for application to install meters.
The costs involved can vary greatly from property to property. This is definitely worth investigation. Treatment without prevention is simply unsustainable!
Jordan Dinga
Abode Strata
P: 08 9368 2221
E: [email protected]
This post appears in Strata News #243.
Question: Should a damaged water meter be covered by the Building Insurance or the Sinking Fund and not individually by the owner?
I live in a block of ten units. All the water meters are placed by the footpath, uncovered and unprotected. Recently my water meter was vandalised. Although the damage was not major and the water meter is still in good working order, the Water Board says any repairs to a damaged water meter are to be paid by the owner. This is regardless of who, what or when the damaged water meter was done.
Our Strata Manager is saying that our insurance wouldn’t cover the owner’s cost because is not a “maintenance issue”…??? I believe that she is wrong. The bank of water meters is within strata boundaries and is therefore common property, albeit measuring individual unit’s usage.
I believe any cost to repair the damage, in case of property vandalism within the Strata, should be covered by the Building Insurance or the Sinking Fund and not individually by the owner.
Answer: If this is a standalone meter for your unit and neither insurance nor the strata company bylaws covers the issue, it is an exclusive service and as such owner responsibility.
There are a few facts that would need to be established:
- Is this an individual water meter or a sub meter?
- Do the strata company bylaws deal with water/gas/electricity meters?
- Has the question been asked of our insurance company, do they deem the meter to be a fixture to common property and if so is it covered under insurance?
Subject to clarification of the above:
- As the meter is still functioning this is not an essential replacement and as such owner responsibility.
- If this is a standalone meter for your unit and neither insurance nor the strata company bylaws cover the issue, then it is as the strata manager says an exclusive service and as such owner responsibility.
Gary Phillips
StrataGP
E: [email protected]
Please note this advice was provided prior to the proclamation of the new strata title amendments and will be updated in due course.
This post appears in Strata News #182.
Question: A roof leak in the strata car park has caused significant damage to my car, corroding paint work, as well as corroding and staining accessories that I have had added to the car. Who is responsible for the cost of the repair?
Just looking for a little advice/clarification if you are able.
I am a tenant living in an apartment complex which has an underground strata car park.
During last year’s storms, the roof of the car park leaked all over the place, in storerooms and on cars.
The leak over my car bay caused significant damage to my car, corroding paintwork, as well as corroding and staining accessories that I have had added to the car.
I have sent a letter of demand off to both the strata and the real estate property manager stating what the costs of repair are and that I am currently holding all parties (strata/real estate agency/ owner) accountable.
This failed to achieve the desired resolution with no one taking responsibility.
I am now looking to take this case to court, but to do so I need to know who is actually accountable to pay for the damages. Are you able to tell me who is accountable in such instances, or point me in the right direction to find more?
Answer: Taking the parties to court should be the last resort.
- Motor Vehicle Insurance
In the first instance, we would generally recommend lodging an insurance claim with your car insurer to promptly repair the damage as quickly as possible. The damage would be taken care of, and the responsibility would lie with your car insurer to pursue the relevant ‘accountable’ party(ies) for the associated recovery costs. By using the car insurer, you would be able to avoid the expense and hassle associated with taking another party to court. - Letters of Demand, accountability & next steps
To point you in the right direction regarding accountability, it is very difficult to give a clear-cut answer as it really all depends on a number of factors i.e. the specific circumstances of the ‘event’, the reason(s) why it is believed the parties mentioned are responsible, and also the response to the Letters of Demand from each recipient.Although unclear in this situation, it is reasonable to expect that the Letter of Demand sent to the Owners Corporation would be sent on to the Liability insurer as a potential claim notification. Based on this assumption, prior to going to court, we encourage you to ensure all avenues are exhausted with the respective liability insurers. Taking the parties to court should be the last resort. If the insurer is aware of the potential claim, it is likely they will want to avoid costs associated with the court system and reach a resolution before this point.
Whitbread Insurance Brokers
T: 1300 424 627
E: [email protected]
Please note this Q&A response is not intended to be personal advice and you should not rely on it as a substitute for any form of advice. Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 Licence Number: 229092 trading as Whitbread Insurance Brokers for further information.
Please note this advice was provided prior to the proclamation of the new strata title amendments and will be updated in due course.
This post appears in Strata News #125.
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.