Addressing Common Property Defects and How to Resolve in NSW Strata Schemes

6 min read

Dealing with maintenance and repair disputes in strata properties can be challenging for New South Wales residents. Lot owners often face difficulties when the owners corporation fails to repair and maintain common property issues. On the other hand, owners corporations may struggle with the legal complexities that arise from failing to address these defects.

This article serves as a guide for both strata owners grappling with persistent defects and strata committee members seeking to understand their obligations. We’ll examine the legal avenues available when common property defects in a strata scheme remain unresolved.

Whether you’re a concerned lot owner or a committee member looking for clarity, this overview will help you navigate the process of addressing neglected common property repairs.

Owners Corporation’s Duty to Repair and Maintain Common Property

The Strata Schemes Management Act 2015 (SSM Act), specifically Section 106, clearly outlines the owners corporation’s obligations regarding common property upkeep in strata schemes. This legislation requires the owners corporation to:

1. Properly maintain and keep common property in good repair
2. Ensure personal property vested in the owners corporation is well-maintained
3. Plan and budget for major common property repairs, including defect rectification
4. Establish a capital works fund to cover significant repair costs

When the owners corporation fails to fulfill these maintenance duties, lot owners may have grounds to seek compensation for losses resulting from this breach of statutory duty.

This framework aims to ensure the longevity and quality of shared spaces within strata communities, while also protecting individual lot owners’ interests.

Addressing Neglected Common Property Repairs in Strata Schemes

When common property elements malfunction or deteriorate, the owners corporation is in breach of its statutory duty under Section 106 of the SSM Act. If your strata’s owners corporation has failed to address a property defect, consider these steps:

1. Examine Strata By-laws and Common Property Memorandum

Begin by carefully reviewing your strata’s by-laws and common property memorandum. Section 107 of the SSM Act allows strata management to implement a common property memorandum within its by-laws. This document may specify certain common property elements that lot owners are responsible for maintaining and repairing.

This distinction can relieve the owners corporation of repair and maintenance duties for these items. Therefore, when facing a common property defect:

1. Check the strata by-laws and common property memorandum
2. Determine who is responsible for repairing the item in question
3. If the owners corporation is responsible, proceed with exploring legal remedies

By clarifying responsibilities at the outset, you can avoid potential disputes and ensure you’re pursuing the appropriate course of action for addressing the defect.

2. Submit a Motion to the Owners Corporation

When common property repairs are neglected, lot owners can exercise their right to submit a ‘motion’. This ensures the issue is included on the agenda for the next owners corporation meeting.

Typically, owners corporations hold one Annual General Meeting (AGM) each year. These meetings cover crucial topics such as:

• Financial matters
• Insurance policies
• Strata committee elections
• By-law modifications

By submitting a motion, you guarantee that the repair need will be discussed at the next AGM.

For urgent repairs, owners can request a special general meeting. These meetings focus on specific, pressing issues and must be requested in writing. To call a special meeting, the requesting owner(s) must hold at least one-quarter of the scheme’s total unit entitlements.

During the meeting where your motion is discussed, both attending lot owners and strata committee members can vote on the repair issue. This democratic process helps ensure that important maintenance concerns are addressed promptly and fairly.

3. Negotiate a Settlement Deed for Common Property Repairs

If the issue remains unresolved, lot owners can explore alternative dispute resolution methods. One option is negotiating a settlement deed with the owners corporation. This out-of-court process typically involves:

1. Engaging a lawyer or conciliator
2. Finding a mutually acceptable solution
3. Drafting a written settlement deed

The deed should clearly outline both parties’ obligations and liabilities. Once executed, it becomes a legally binding agreement.

Enforcing the Settlement Deed

If the owners corporation fails to fulfill its promises under the deed, lot owners have legal recourse. For example, in the case of Byrne vs Strata Plan [2021] NSWSC 342:

• The owners corporation had agreed to investigate building works and remedy defects related to mould, fungal spores, and bacteria.
• When the owners corporation neglected its obligations, the strata owner took legal action.
• An application was filed with the NSW Supreme Court to enforce the deed and recover lost rent due to the owners corporation’s non-compliance.

This case demonstrates that settlement deeds can be enforced through the court system if necessary, providing lot owners with a means to ensure agreed-upon repairs are completed.

4. Seek Mediation through NSW Fair Trading

If settlement negotiations fail or aren’t feasible, lot owners can turn to NSW Fair Trading for strata mediation. This step is often mandatory before proceeding to the NSW Civil and Administrative Tribunal (NCAT), as stipulated in Section 227 of the SMM Act.

Key features of NSW Fair Trading mediation:

1. Free of charge
2. Aims for amicable dispute resolution
3. Voluntary and confidential process
4. Conducted by an impartial mediator

Outcomes of mediation:

• If an agreement is reached, the mediator can help draft a written agreement
• With both parties’ consent, an enforceable order can be created
• If mediation fails or an agreement breaks down, parties can then apply to NCAT

This cost-effective and less formal approach often leads to mutually satisfactory resolutions. It provides a structured opportunity for both sides to voice their concerns and work towards a solution before resorting to more formal legal proceedings.

Pursuing Resolution through NCAT for Unrepaired Common Property

If mediation fails or an agreement breaks down, the next step is applying to the NSW Civil and Administrative Tribunal (NCAT). The SMM Act grants NCAT broad powers to resolve strata disputes.

NCAT’s capabilities include:

1. Issuing interim orders to halt actions or preserve status quo
2. Making decisions on owners corporation meetings and resolutions
3. Addressing by-law breaches
4. Resolving common property disputes

The NCAT process typically involves:

1. An initial hearing with a conciliation attempt
2. If conciliation fails, a formal hearing follows
3. Parties present cases and cross-examine witnesses
4. NCAT issues an order specifying required actions

Most strata defect repair disputes are resolved at this stage. However, if the issue remains unresolved due to an unfavorable NCAT order, you can:

1. Apply to set aside the order
2. File an internal appeal with the NCAT Appeal Panel
3. Pursue a statutory appeal in court if dissatisfied with the internal appeal outcome

This multi-tiered approach ensures multiple opportunities for resolution while providing avenues for appeal if necessary.

Concluding Thoughts on Resolving Strata Property Defects

Strata legislation provides a comprehensive framework to ensure owners corporations fulfill their duty to repair and maintain common property. This process offers multiple opportunities for both lot owners and the owners corporation to voice their concerns and seek resolution.

Key points to remember:

1. The law provides a step-by-step approach to addressing common property defects
2. Both parties have ample chances to present their case at various stages
3. Options range from informal negotiations to formal legal proceedings

When dealing with strata disputes, seeking expert legal advice can significantly impact outcomes. Experienced strata lawyers can assist with:

• Negotiating on your behalf
• Drafting settlement agreements
• Representing your interests in tribunals and courts

By understanding your rights and the available legal pathways, you can effectively navigate the complexities of strata property maintenance disputes. Remember, persistence and proper legal guidance can help ensure that necessary repairs are completed, preserving the value and livability of your strata property.