Busting Building Defect Myths in Strata

Busting Building Defect Myths in Strata

Reading through the comments on this article about the as builder/developer Toplace collapses, it’s clear that there is a lot of misunderstanding among people about how building defects in strata works. So here we bust some of the most commonly held, and incorrect ideas when it comes to defects in strata buildings.

There is a 7-year warranty on all building defects.

NO.
Effective from February 2012, the warranty period for defects under the Home Building Act 1989, was amended to 6 years (structural defect) and 2 years (any defect).
While the definitions of what falls into the 6 or 2 year category of defects has been updated and changed a number of times, 7 year warranties have not been around for a while now.

Buildings have Home Owners Warranty Insurance protection

Probably not.
The Home Building Regulation 2014 lists exceptions for works requiring Home Owners Warranty insurance, and this includes new multi-story buildings of 3 or more stories and containing two or more separate homes.

Telling the builder/developer of a defect within the 2 or 6 years is sufficient to ‘stop the clock’

No.

The warranty period refers to the time the Owners Corporation have to commence action (that means begin litigation), and that clock starts ticking when the FIRST occupation certificate is issued. There are certain circumstances where an additional 6 months can be applied.
If your owners corporation has defects that have not been repaired, and these warranties are about to expire you should seek urgent legal advice.

Don’t we have a 10-year warranty?

Sort of.

The Building and Design Practitioners Act 2020 places a duty of care on the builders and other to exercise reasonable care to avoid economic loss caused by a defect. This is a differing legal argument to identifying defects under the Home Building Act. Both can be run at the same time. If this is a possible recourse for your community you should definitely seek legal advice to understand your rights.

But the Government holds a bond to fix my building?

Maybe

For all building works, where the contract is signed after 1 January 2018, the developer is required to lodge a bond, the value of which is 2% of the total contract prices to complete the building.

At the completion and occupation of the building there is a process for the developer and owners corporation to go through to identify building defects, and if they are not repaired, claim back on that bond. You can read the official manual on this here.