- This topic has 24 replies, 7 voices, and was last updated 13 years, 3 months ago by .
-
Topic
-
Is the owners corporation liable to pay for loss of rental to a unit owner where building works on common property result in either a tenant vacating the leased unit or the tenant paying a reduced rental? Neither Owners Corporation building insurance or landlord’s insurance makes any provision for loss of rental to the unit owner.
-
Replies
-
i only became more actively involved recently, though this roof defect was as a result of construction and has been discussed overtime. i don’t attend strata meeting or even read any of reports in details.
repair of defect undertaken or covered by builder or building insurance, building is over 10 years, first occupied 1996 o 7.
top units, 4 to 5, in a building of 18 units or so. as i became aware, i contacted strata to request information and delay in repair or fixing of roof, so that tenants can be given noticed to move out, since i was told that fair trading states they do not need to pay rent whilst they are being compensated for temporary accomodation in motel and storage of furniture whilst i am going to be completely out of pocket during this time. i was even told that it is still under tender and construction date not clear yet, but may well take up to 3 months by strata.
when tenants decided to go and move out last week, the agent said all other units have moved out, and they were pressured by builder to move out too.
we checked the apartment on weekend, no electricity whatsoever, so obviously it has been disconnected by builder, rather than tenants which usually despite disconnection actual supply will be there until someone re-connect.
i would gladly get advice from anyone and everyone and consider my options. i am yet to get in touch with strata. will i be able to call for extra-ordinary meeting to resolve or at least discuss this matter.
the actual strata manager was not in contact with me directly, only forward response from builder insurance, and i was told i am not supposed to contact them directly and all has to go through strata.
Here’s a suggestion from a strata lawyer – move back in and claim the unit as your residence. The insurers will pay for the relocation and accommodation of owner residents. Then rent yourself your current place and all will be as it should.
If you want to be alerted when anyone replies to your posts or responds to this topic, please register and login, then you will be able to subscribe to the topic. The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers. NB: Longer threads may spill over to additional pages - look for the numbers on the bottom right, under the last post.
JT’s suggestion is brilliant.
It will probably solve Rita C’s problem, as she maintains they are covered by home warranty insurance.
But, if that’s the solution, why don’t the insurers admit defeat and offer to pay either alternative accommodation or loss of rent?
Perhaps, like me, they thought she was asking for both.
Might be worth clarifying it with them.
Rita C … you didn’t actually answer my first question. Are you the landlord of the top floor unit? That is, are you asking out of self-interest, or are you one of the EC trying to sort out this mess?
Landlord2’s case may be different.
Builder’s warranty insurance may have expired as he states the building is 10+ years old. Unless of course, they’ve been complaining to the builder for much of that 10+ years.
Even though “this roof defect was as a result of construction” (i.e. poor original workmanship), if you don’t discover it within the statutory warranty period, you’re not covered.
And then, in NSW, there’s the question of whether “poor workmanship” is covered at all.
So, the original question may still need an answer. Is the OC “liable” for consequential loss?
And now some unsolicited advice to Landlord2.
For a real estate investor, you don’t seem to know very much about your investment.
1) There are 4 to 5 units on the top floor? I’m pretty sure there would be an exact number.
2) There are 18 units or so in the building? I’m pretty sure there would be an exact number.
3) The building is over 10 years old, but was first occupied in 1996? That would make it at least 16 years old. I doubt that builders warranty insurance still applies.
Rita,
If you’re confused, spare a thought for the people trying to help you with this problem, as we may not have all the facts yet.
1) You mention the Home Building Regulation 2004. Are you in NSW?
2) How old is your building?
3) How many storeys does your building have (excluding basement parking levels or ground level if it’s purely garages)?
4) Are you under the mistaken impression that the remedial builder’s warranty insurance will cover your alternative accommodation? His policy will only cover any defects he creates, and he hasn’t started yet. It’s the original builder’s policy under which any claim for alternative accommodation would have to be lodged. And, depending on the circumstances, there may not have been one.
5) Everyone, feel free to jump down my throat if I’m wrong on that.
6) What is the nature of the “building defect”. Yes, I know the result is water penetration, but what is wrong on the roof, and how are they going to fix it?
7) What has your EC advised you?
Ok, I’m going to “jump down your throat”.
We have established that the building defect has been identified, it is covered by Home Warranty Insurance and that the extent of the remediation will require the apartment to be unoccupied for an unspecified period.
We have also established that under the terms of this specific insurance that the owner-occupier or tenant in this kind of situation is accommodated elsewhere. However, compensation for lost rent is not specifically included in the policy.
This is a grey area and might require legal action to establish that the Owners Corp has to pay this, either themselves or through insurance cover.
There needs to be clarification of this under the law whereby the clause in insurance that covers and owner-occupier also covers a landlord (based, say on the rent collected in the three months prior to the claim).
The strata lawyers I have spoken to all agree that there is the basis for a claim to be made in this kind of case – the question arises whether it’s more money and trouble than it’s worth to take this to court.
A decent Owners Corp would recognise the benefit to the whole building in having this done quickly and efficiently and recompense the affected owner without anyone having to hire lawyers.
Or is there a “hard cheese” clause in strata law that says if you are unlucky enough to be the only person who suffers while the rest of your building benefits, you just have to cop it?
In very simple terms, Rita C could come to an arrangement with the tenants for them to continue paying her rent while the insurers pay htheir rent elsewhere.
But what happens if the tenants pull out of the rental agreement (as many would)? There is little benefit in them being shunted around from pillar to post. If there are no tenants, there is no relocation so RitaC would be seeking compensation for an apartment she can’t rent out rather than relocation and accommodation expenses.
That’s why the easiest answer is for her to move back in. Also, it sounds like the EC and and strata manager aren’t being at all helpful. Maybe they have founfd the “hard cheese” clause.If you want to be alerted when anyone replies to your posts or responds to this topic, please register and login, then you will be able to subscribe to the topic. The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers. NB: Longer threads may spill over to additional pages - look for the numbers on the bottom right, under the last post.
hi JT et al,
thanks for all the advice and suggestions. i am in NSW, and not really familiar with all the rules and regulations mentioned so far; but i would have no problem going after strata or anybody else legally to defend my rights.
in my case, tenants initially refused to pay outright whilst being compensated, then they were happy to pay partly, but i do not feel it is fair. thus i decide that they should leave, and i plan to return back to apartment especially if work has not started, and no news whats over from anyone responsible.
the roof defect was a construction defect, and not wear and tear, so i know for a fact it is not covered by landlord insurance which i had.
my next step is to contact strata manager in charge and speak to her or him directly to find out what my options are.
i
Rita,
Thanks for answering those questions.
I hope you understand that I was only asking them to confirm that you actually had an insurance policy which covered your situation.
I think the next step is for you or the EC to negotiate with the insurer for advance agreement in writing that they will cover either alternative accommodation or loss of rent.
You have several bargaining chips:
1) As you say, they had the option of excluding loss of rent in the policy, but did not do so.
2) If they do not agree to cover loss of rent, you will move back in as per JT’s suggestion, and they will then have to cover your alternative accommodation and removal/storage costs.
3) So, they can save money if they agree, because you will not need to claim removal/storage costs.
But, a couple of other points:
1) If the unit is not declared uninhabitable, but the tenants move out anyway for fear of “inconvenience”, you have the right to sue them for breach of contract. Get your compensation from them instead of the OC.
2) As I said before, we had our whole pitched roof replaced without any top-floor resident having to move out. In fact, all residents (owners and tenants) were equally inconvenienced by the part of common property cordoned off for the debris chute and tile elevator. Jimmy will be pleased by our non-discrimination!
And, for Jimmy:
Yes, there does seem to be a “hard cheese” clause in strata law, and the whole cheese platter is always placed firmly in front of resident owners.
In this case, if their unit is declared “habitable”, they will not be compensated for the “inconvenience” of building works and noise, but apparently tenants have the option to end their lease without penalty or to receive a reduced rent.