Time already up for new unit blocks

Owners who have just moved into brand new apartment buildings may have already missed the deadline for defect claims, according to strata experts, while others may have only weeks to make claims or risk missing out completely.

Under the new Home Building Act which comes into force this week, claims for rectification of minor defects – basically anything less than the building being uninhabitable – have to be made within two years.

However, according to the Owners Corporation Network (the peak body for apartment owners) the clock on defects starts ticking when a Certificate of Occupancy is issued and that could be months or even years before the first residents even move into the building.

“The government has been very coy about this,” says Karen Stiles, executive officer of OCN, “But basically it seems even an interim occupancy certificate for a car park or a show apartment counts, and owners have only two years from their issue.

“You could have owners turn up at their first Annual General Meeting, ask for a defects check and be told it’s already too late – time is up.”

The new Act has redefined the majority of building defects as “minor” meaning they have to be claimed within two years. Major defects have a six-year claims window but they have to be very serious.

“The building would need to falling around your ears,” leading strata lawyer Suzie Broome of Makinson d’Apice told Domain. “We would advise anyone in a new apartment building to ask their executive committee to find out now how much of the clock has already run down.

“Then they need to talk to a strata lawyer about the next step before it’s too late.”

However developers pressure group the Urban Taskforce has lashed out at attacks on the Home Building Act, labelling them “scaremongering”.

“The Urban Taskforce supports the improvements to the Home Building Act made by the NSW Government and we are keen to continue constructive discussions with all parties in the industry,” a Press release states. “This needs to be with the objective of building confidence in apartments as a way of living rather than creating fear in the minds of potential apartment owners.”

The Press release said the Urban Taskforce had worked with consumer groups, including the OCN, to establish a package of changes that ensure quality builders and developers would not be “continually fighting claims that have dubious evidence”.

“It is important that quality buildings are constructed and that any defects are quickly rectified. The changes to the Home Building Act would seem to be contributing to a better process for ensuring quality and for managing defects where they occur.”

But Suzie Broome, who has, along with many other strata lawyers, spent the past week trying to get claims established before the new Act came into effect, says educating apartment buyers about the potential pitfalls of off-the-plan apartment buying is the best way forward for everyone.

“People buying off the plan need to be a lot more savvy about who they are getting into bed with,” she told Domain.

“There’s a reason established developers like Mirvac’s buildings are over-subscribed.  People are prepared to pay a premium in the knowledge that there is much less chance of being hit with a special levy to fix defects.

“You are taking your chances with a one-project firm that disappears as soon as the keys are handed over.”

However, the new Act does make some effort to stamp out illegal ‘phoenixing’, where a company closes down leaving large unpaid debts, only to re-emerge under a different name, although the details of how this will work are yet to be spelled out.

Meanwhile the Owners Corporation Network is running an online campaign on ocn.org.au to get apartment owners to write to their MPs or the Premier to ask them to intervene and change the regulations.