Study Reveals Defective Building Materials Create Huge Problems for Apartment Owners

Recent survey results reveal problems so severe that they caused Christopher Guilding, a prominent professor at Griffith University in Queensland, to call for a government inquiry. The survey, which spanned several states, found that individuals who held strata title to the apartments in which they lived consistently considered building defects to be the issue of top concern.

Resident building managers and strata lawyers, who also participated in the survey, emphasised the critical nature of this concern. There is strong sentiment that unless current trends are curbed and effective remedies put into place, the whole economy surrounding strata properties could crumble in the next few years.

Lack of Legal Support for Apartment Owners

Law firms familiar with legal matters regarding strata properties, which often have a complex system of development, construction and ownership, are alarmed by recent court case decisions, legislative actions and the lack of adequate regulation regarding development and construction. Here are two examples:

In a 2014 ruling, the High Court of Australia determined that the owners of a large apartment complex could not recover costs from the builder for structural defects that had not yet appeared when the strata plan was registered nor when the final certificate was issued.

• Also in 2014, legislators in New South Wales, by passing the Home Building Amendment Act, drastically reduced the ability of apartment owners to be compensated by the builder for defects in original materials or construction.

This Act places a two-year time limit after construction on most defects and limits “major defects” to those that are likely to render the building or some part of it unusable or uninhabitable.

Factors Contributing to Latent Building Defects

Several factors are thought to contribute to the existence of latent defects in strata structures, including the following:

• Developers who have no long-term plans to be in the area and feel no commitment or obligation to the buyers of their properties

• Cost-cutting methods implemented by some developers and builders, including the purchase and installation of inferior materials

• Builders or construction workers who are not fully trained and certified

• Private certification of buildings, and inspections that are not ongoing and thorough during all phases of construction

Study Results Available in September

Full results of Professor Guilding’s study, entitled “Inquiry Into Key Challenges In Australian Strata Title,” will be released in September at the sixth biennial Strata and Community Title in Australia for the 21st Century conference, hosted by Griffith University and held 2nd – 4th September at the Surfers Paradise Marriott Resort and Spa, Gold Coast, Queensland.