Damage to Unit because of common property defect – Insurance Excess

Hi Hasbean

The water pipe will be common property so long as it is not for the exclusive use of one lot. I assume it is common property otherwise the owners corporation’s insurance would not have paid you.

The fact that the carpet:

– in your bedrooms was not covered by the OC’s insurance; and

– was covered by your insurance,

does not exonerate the OC’s liability to compensate you for all damage to lot property caused by defective common property.

The OC is liable to you for your losses and you are entitled to recover such losses from the OC (including the excess). Whether or not the conduct of the OC is normal is not relevant.

Indeed, I would expect your insurer to consider recovering monies paid to you from the OC.

Regards

To answer Hasbean's last question, it's “normal” for ECs to refuse to pay for CP-caused damage, but it's neither right nor legal.

And to jump in and answer for Chris, the OC would have been liable for any damage cause by a fault in Common Property like a leak of pipes inside a wall.

Easty

As you'll see from today's column in the Herald, the fact that the OC aren't aware or even couldn't possibly be aware of a problem is no defence against a claim that they are liable for common property and any damage cause by its failure. It seems to be an absolute responsiblity without limit.  Is it uninsurable?  Probably not – just bloody expensive.  And I agree it shouldn't be like this – but it is.

Struggler

Please do not despair – strata living works and can be a panacea for those who can't or won't look after a freestanding house.  It is also a boon for the older generation and those just starting out on the life’s great journey of property ownership.

In my view the problems with strata living does not lie in the Strata Schemes Management Act, although there is always room for improvement,  but rather, as I think our moderator once put succinctly “That many who live in Strata pretend they don't”.

Much of this has to do with the concept of common property – for example if you greeted a new owner to a strata plan, they being all excited about their new purchase, and said “I am so and so from the Executive Committee and welcome to our plan.  Now here is your unit; please note that you own nothing in this unit except the internal walls, fixtures and by the way the paint on the ceiling and external walls.  That’s it everything else belongs to us, the Owners’ Corporation – the doors, external walls, floors, windows, doors etc etc. so don’t touch any of this unless we give you permission”.

I reckon most new owners would say, he must be kidding  – I just paid a bomb for this joint and I have big plans to make some improvements.  And that is when the trouble starts.

Common property is a concept and for many lot owners a concept they can’t or won’t accept or simply just don’t understand because it is so at odds with previous house ownership or living experiences where they just did whatever they wanted whenever they wanted. It is also true many Executive Committee’s fail to understand the concept of common property and so begins the constant battle, arguments, litigation, fights etc. about who is responsible for what.

However at its most simplistic the principal should work well in a well-managed strata.  The fact is that this concept of common property frees owners from the responsibility of having to look after probably 75% of their lot and done competently should ensure a safe, secure and sound building.

But that is an ideal world I know – here for example are some of the more innocuous work that lot owners undertake because they can’t come to terms with the idea that most of their lot belongs to someone else and  anyway it is only minor work:

1. Install air conditioning units on their balconies; drill into the water proof membrane to secure the compressor and years later after the water has caused damage to the structure turn to the OC to repair.
2. Drill window frames and external doors to install locks – thereby compromising the manufacturer’s waterproofing design of the window and or door;
3. Change locks on doors and create a non-compliant fire door
4. Install security screens on external doors which don’t comply with fire requirement and are intrinsically unsafe as they don’t provide ready egress in case of emergency.
5. Install film on external windows which if not done correctly can degrade and or cause windows to crack.
6. Throw down a few tiles in their dining room without any consideration for their neighbours below – out of sight out of mind.
7. Install aerials and dishes on roofs resulting in leaks.
8. Generally drill into CP walls causing all sorts of problems.
9. I’ll put a Spa on my balcony – what a great idea.

10. Install “over the top” balcony gardens and when watered annoy neighbours downstairs

The list can be as long as lot owner’s imagination.  And some just don’t stop there of course.  They add rooms; take over CP anything they can get away with.

The truth is that many owners want to claim ownership of CP when they want to change it (like the examples above) and are just as quick to disown CP when something goes wrong and they want it fixed.

It falls to the Executive Committee to monitor the situation and they have to be firm but also understanding.  By this I mean they should have in place processes and by-laws that support lot owners improving their lots but within strict guidelines that don’t compromise safety and building standards and ensure ongoing maintenance of improvements lies with the lot owner and the not the OC.

And one of the best ways to stop lot owners fiddling around with the common property is to tell them that when they go to sell the strata inspector will often pose the question “Are there any unauthorised alterations or additions to the common property attached to the lot my client is thinking of buying”.  That an affirmative answer will put your sale in jeopardy should have them very concerned.

And I know you say that you can’t know what changes lot owners make to CP but I think you would be surprised – people talk and an EC with its ear to the ground will usually find out what owners have done.  And of course the occasional inspection helps.

The other control the OC has is that soon as it becomes aware a change has been made to the CP without approval it can order the improvement to be removed and the CP made good.  And this can apply to a person to whom the offending lot owner sells.

So don’t despair – the good thing is that with forums such as this and bodies like the Owners Corporation Network and the information available on the internet generally things should improve.  Strata living is here to stay and will get bigger and hopefully better.

So you think my opinion, backing Chris Kerin's but countering Easty's view that there must be negligence before the OC is liable,  “doesn't apply”?

In that case, my best advice is to trust no one, apply your extensive legal knowledge (plus the free legal advice you have been given – by a lawyer who is expert in this field, no less) and run the case yourself. 

See how much out of pocket you are after that.

This topic is now closed.