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Owners corporation law

12 Jun 2015

Owners’ Corporations (OCs) need to observe time limitation periods for bringing a building defect claim.

An OC owes a strict duty to repair and maintain its common property, and this duty can be enforced by any member of the relevant OC.

The duty to do so arises whether or not the damage to the common property is brought about from fair wear and tear, defect, storm event or from any other cause.

If an OC suspects that there is damage to common property (or accelerated deterioration) from either:

  • Defective workmanship or building practice; or
  • Defective design by the builder / developer/ architect

Then the OC should immediately engage an expert engineer to inspect the common property and commission an expert report on the exact cause of the defect and an explanation as to how it should be fixed.

It is well known that an OC has only 10 years from the date of the occupancy certificate to bring a claim for defects of the common property.

What is not as well known is that the time limitation period is reduced to six years in circumstances where the OC becomes aware of the existence of the defect (or is “reasonably” taken to be on notice of the existence of the defect).

If the OC has missed the time period in which to file a claim, then it will have no choice but to fund any repairs itself by raising special levies.

It is not compulsory for a builder to have insurance to cover his workmanship faults if the building was constructed after 2003 and if the building is in excess of three storeys.

Care should also be taken to find out whether the builder’s company is still in business. If it has been de-registered, then there will be no utility in bringing a claim.  An OC should also investigate whether the builder sub-contracted to an alternative company to complete a particular part of the building, as this will have a bearing on who the OC can chase for rectification.

Earlier this year, the Supreme Court further confirmed a long-held view that an OC may sue a developer for defects under the Domestic Building Contracts Act, although only in circumstances where the particular contract between the developer and builder makes explicit reference to the nature of the building work to be performed.

This is a complex area of the law and great care should be taken in engaging any expert or in taking any steps to bring a claim. However, it is recommended that an OC ought to be commissioning building-wide reports from around the five-year mark after completion with a view to bringing a claim for any defects against all relevant wrongdoers.

It is very rare that a builder’s company would still be registered 10 years after the project is completed, limiting the window of opportunity for an OC to seek redress.

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