STRATA NSW: Owners Corporations, Common Property Repairs and Insurance – A Tricky Relationship

This article discussing Property Repairs has been provided by Warwick van Ede, JS Mueller & Co.

Introduction

Owners corporations are not uncommonly faced with the need to repair common property. Cracked walls and failing waterproof membranes are two of the common issues which owners corporations have to deal with. Particular difficulties may arise where, if the owners corporation takes no action, there may be further consequences in terms of damage to other common property, damage to particular lots, and damage to the property of lot owners.

An example of what can happen is where there is water penetration to a lot caused by a cracked or insufficiently sealed roof, and because of an owners corporation’s failure to rectify the water penetration issue, the entire ceiling located beneath the roof in question collapses, and in the course of doing so, destroys all the furniture in rooms of the relevant lot.

For some owners corporations, the backing of an insurer can be a “life saver” in a situation like this – but what should the owners corporation do if their insurer declines coverage or otherwise refuses to pay for all or part of the damage which the owners corporation (or a lot owner) is seeking to have fixed?

It is important that owners corporations understand that there may be a difference between their strict obligations under the Strata Schemes Management Act 2015 (the Act), and the rights (if any) they may have to recover the costs of meeting those obligations from their insurer.

Owners Corporations and Common Property – A Strict Obligation

Section 106 of the Act imposes on owners corporations a strict obligation to maintain and repair common property. Owners corporations need to understand that this obligation is not optional, and nor is it simply a duty to “do your best”.

Read More: https://www.lookupstrata.com.au/common-property-repairs-insurance/

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