85% of new apartment buildings contain defects, but owners left with no protection
85% of new apartment buildings contain defects, but owners left with no protection; High court rules that builders do not have a duty of care to apartment buyers
Tweet Topic Started: 10 Oct 2014, 11:57 AM (355 Views)
The decision handed down on Wednesday by the High Court that builders do not have a duty of care to people who buy their apartments is a devastating blow to the apartment industry as a whole, and to unit owners and prospective buyers in particular.
The decision that the owners corporation in a 22-storey building could not sue the builder to recover the cost of fixing defects in common areas exposes the paucity of consumer protections for apartment buyers.
As reported in this story, there is now no recourse for apartment owners who don't qualify for home warranty insurance (if their buildings are more than three storeys high) and may have failed to get defects rectified by their developer.
It's the third get out of jail free card in less than six months handed to dodgy builders. Earlier this year state parliament approved changes to the Home Building Act which seriously restricts the time frame in which certain defects can be claimed.
And the 2 per cent defects bond that was to have been part of proposed strata law reforms will not now come into force until 2016, if at all.
The High Court ruling basically says that because developers have the expertise to choose their builders and apartment buyers have the expertise to choose their developers, and there are existing safeguards, owners are not "vulnerable" in a legal sense.
That means the builders do not have a "duty of care" to apartment buyers who, if they fail to get defects rectified by developers, are left with no recourse but to fix them at their own expense.
Stephen Goddard, a leading strata lawyer and chairman of the Owners Corporation Network, the main advocacy group for apartment owners' rights, told Fairfax Media the State Parliament needed to step in to address a "gaping hole in consumer protection" for residential apartment owners.
A recent survey by the UNSW Built Environment Department showed that about 85 per cent of new apartment buildings contained defects.
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