Strata Defects are a Serious Problem

I’d thought that after 20 years or more of legal actions raising awareness of the problems of building defects in strata buildings that the problems would be smaller, less common and easier to resolve.

But, my recent re-involvement in a few strata building defect problems and some preliminary research results suggests I’m wrong and the problems of strata building defects are as bad as ever (if not worse).

Here’s some recent indicators of the latest kinds of problems being experienced by strata buildings.

The City Future Research Centre at UNSW has been researching strata executive, manager and owner experiences of strata living and found that many of them had experienced defects in their buildings and had trouble getting them resolved.

Of 413 executive committee members surveyed in2010, 51% had experienced defects in their schemes and of 359 strata lot owners surveyed so far 81% indicating that they had experienced defects.  And, when asked if they had trouble getting the defects fixed 70% said that they experienced problems because of things like developers holding control of schemes, builders no longer operating, complex home warranty insurance claim processes, needing to start legal proceedings and an incompetent or deadlocked executive committee.

That’s a significant majority of them and, even if it’s a bit overstated, it suggests a very widespread problem for strata owners and others.

There’s also the unhappy stories of high profile Sydney buildings like Altair, Horizon and Hyde Park Regency who after spending years and hundreds of thousands of dollars running legal actions were largely unsuccessful because of failed expert evidence, strict interpretations of time limits and notice requirements, and the liquidation of the builders.

Plus Home Owners Warranty insurance protections have been watered down or eliminated over the last decade so that buildings over 3 storeys are not covered at all, all claims are ‘last resort’ so can only be made after pursuing the builder (and others) to finality for a few years and time limits are shorter for many defects and expire sooner than many owners, committees and managers realise.  Leaving them with no fall back in many cases.

And, in Canada there’s a new report of some unfortunate owners in Calgary who have serious building defects.

The Calgary Herald reports that owners in the Bella Vista building are facing special assessments ranging from $50,000 to $187,000 each that must be paid by 15 September 2011 to repair leaks and major deficiencies to the roof, balconies, parkade and other areas of the complex as it appears that there’s now a repair bill of about $5.5 million, up from the initial estimate of $3.8 million last fall once the full extent of the damage was uncovered.  The owners in the four-storey building blame shoddy workmanship for their plight -facing crippling bills to repair the damage and possible foreclosure on their homes. They’ve filed a $4-million lawsuit against the developers, designers, the City of Calgary and a handful of individuals seeking damages to cover "faulty" materials, workmanship and inspections.

One onwer who paid $270,000 for his twobedroom condo in 2009 is now faced with a repair bill of $74,000 and says "I'm broke. I'm done. I can't pay anything”.

It’s a seriously unsatisfactory situation for strata owners and one I’ll be doing more about in the future.

After all, it seems that strata apartment owner get less protections from shoddy building than owners of freestanding homes (which makes no sense).  And, they’ve got better and easier consumer rights when buying a $50,000 family sedan than when buying a $500,000 apartment.

It’s not right and it’s time something is done about it.  What do you think?

Francesco …