Strata Defects Submissions by SCA & OCN

In July I blogged about the NSW Government revamping Home Building laws and the opportunity to make submissions about this important strata issue (see Repairing NSW Building Laws).

Strata Community Australia and the Owners Corporation Network have made a joint submission focusing on strata building defect issues.  You can read the whole submission here but some of the suggestions SCA and OCN make specifically about strata building defects include the following (my paraphrasing) -

• Introduce a meaningful tiered licensing system for developers
• Define completion dates as strata plan registration dates (made 3 times)
• Create a database of all HOW time limits dates for all (strata) owners
• Educate lot owners about defects, rectification works, fair wear and tear & their rights and responsibilities
• Require builders & developers to inspect lots & common property before handover
• Further definition of "structural defect" is required
• Restore HOW insurance to all strata buildings over 4 storeys (made 2 times)
• Restore the single 7 year time limit for claims (made 2 times)
• Abolish self-certification of building completion
• Variously to improve the CTTT mediation system, impose binding expert determinations on defect claims, shortening the CTTT processes, increase CTTT's money jurisdiction 
• Prevent the use of Phoenix companies to avoid defects rectification
• Imposing the same obligations on unlicensed builders
• Tightening up builders' opportunity to rectify defects so that it's for a limited time, once only, based on detailed work scopes, independently defined-supervised
• Create a national register of unfit persons with ASIC
• Personal liability for directors and shareholders  of non public companies for building defects
• Create a public register of HOW insurance policies

It's great that OCN and SCA are supporting strata stakeholder interests and you can't criticise the intentions motivating the suggestions, but I can't help feeling that this submission is a bit defective itself.  I say that for 3 main reasons.

1.  The submission fails to understand and deal with the shifts that have occurred in NSW over the last 10 years affecting the Home Building Laws, Court decisions that have re-interpreted strata building rights, the downturn in real estate development and the shift in insurance sector participation rates.  So, making submissions that things should go back to the way they were in 2003 is naive.  It would be better to suggest changes that fit into the likely future legal, political and economic environment.

2.  There is no analysis of the way these issues are dealt with (successfully or otherwise) in other jurisdictions (Australian or international) to illustrate why changes are necessary and which changes have already been tried.  For instance, Tasmanian strata laws include provisions assigning developer rights against builders to strata corporations and Victorian strata laws impose obligations on developers to resolve building defect issues in the first few years.

3.  Where's the invention and innovation?  Strata defects wont go away with more of the old solutions - they need innovative ideas to align the interests of all strata stakeholder (owners, developers, builders and regulators) so that  everyone benefits from properly built buildings.  These kind of submissions are where the big (and new) ideas should be formulated since they're unlikely to come from anyone else.

Given the likelihood that NSW developers and builders will continue to campaign that building defects are lawyers' and experts' beat ups, HOW insurance is unaffordable and that thier profitability is adversely affected by over regulation, the strata sector needs to make well reasoned, supported and sophisticated arguements to get improvements (or avoid further reductions in consumer protections).  After all the NSW Government Issues Paper is framed on the basis of reducing (not increasing) builder obligations.


Francesco ...