Liability for Building Defects

1 May 2020

An issue that arises frequently in strata title buildings is building defects. Despite many laws being passed to help consumers with COVID-19 related issues, the responsibility (and time limits) for rectifying building defects have not changed. Bodies corporate and body corporate managers need to monitor and manage building defects very carefully to ensure rights are preserved, and defective building works are identified and rectified on a timely basis.

What is a Building Defect?

A building defect is building work that is faulty or not satisfactory as defined by the Queensland Building and Construction Commission Act. Broadly, work performed must be in keeping with the standards of the Building Code of Australia.

Building defects can be either major or minor. A major defect can be described as a defect which carries a risk of damage or destruction to the building or fundamentally affects the use of the building. A minor defect is any defect that is not a major defect.

The responsibility for rectifying the defect can fall to various parties depending on factors such as the nature of the defect, the location of the defect and the age of the building.

Warranty

The applicable claim periods to the Queensland Building and Construction Commission (QBCC) are 12 months from becoming aware of the defect and

  1. 12 months from practical completion for minor defects; and
  2. 6 years and 6 months from practical completion for major defects.

Within applicable claim periods, the builder is responsible to remedy any defects. Enforcement of statutory warranties is overseen by the QBCC.

Claims before the QBCC are to be distinguished from contractual claims, which are a separate right available to aggrieved owners for breaches the contract the developer entered into with the builder. A QBCC claim should be made in the pursuit of rectification of the defect, a contractual claim is appropriate where rectification is not a suitable remedy or the QBCC claim was unsuccessful and must be made within 6 years of practical completion.

Defects with common property and individual lots are both covered by a statutory warranty and the body corporate has the power to bring an action on behalf of a lot owner.

It is important for a bdy corporate to distinguish between the developer and the builder in pursuing a claim for rectification of building defects. The developer is not necessarily (and often isn’t) the builder and the developer’s obligations are ordinarily limited to the provision of documents to the body corporate.

After the initial six year period, no statutory warranty applies and previous cases have largely removed the capacity for a body corporate to make a claim outside of the statutory warranty period.

Who is Responsible?

After expiry of the statutory warranty period, responsibility for rectifying building defects largely moves to the body corporate.

Bodies corporate have an obligation to maintain the common property and, if the scheme was established under a building format plan, any structural elements of a building. Similarly, committees must act reasonably in their administration of the common property. The obligation to act reasonably would extend to the obligation to rectify and identify defects in a safe and timely manner.

Importantly, if a body corporate fails in their obligation and an individual lot suffers loss or damage as a result of that failure, the body corporate may be responsible for resultant damage or harm.

However, as with ordinary maintenance obligations, a body corporate is not responsible for building defects within lots, unless those defects relate to the structure of a building and the building was created in a building format plan.

Mitigating Risk

To avoid risk associated with building defects, bodies corporate should:

  1. Identify the practical completion date of the building; and
  2. obtain a defect report well in advance of the expiry of any timeframes; and
  3. action defects identified in the building defect report as soon as practicable, but well before the expiry of the statutory warranty.

Written by Ben Seccombe & Jarrod Clarke


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