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Strata building defects - who deals with them, and who pays for them?

What is a building defect?

A building defect usually stems back to its construction or renovation. It can be a major issue preventing the use of the building or posing a safety or collapse risk, or it could be a minor defect such as faulty design or workmanship, substandard materials or non-compliance with standards, which affect appearance but not safety or structure.

What are the common types of building defect?

  • Structural defects: usually a major defect and can include things like unstable foundations or footings, cracks in loadbearing walls, shifting of internal walls etc
  • Roof leaks: can be a major defect, especially where it affects liveability, safety, and/or structural integrity. These can also be fairly minor and just need an adjustment of tiles or resealing of joins.
  • Electrical or plumbing faults: can definitely be a major defect where the faults present a safety, fire or flood risk, affect power, gas or water supply, affect sewage or wastewater disposal etc.
  • Fire safety system faults: another major defect, especially if fire or smoke detectors, fire alarms, fire doors, fire sprinklers or water risers and hydrants are impacted. These should be identified during annual fire safety checks.
  • Cladding: a significant issue highlighted by devastating fires in recent years, improper selection or installation of cladding can be a major defect due to the risk of fire
  • Surface cracks: these can be in tiles, masonry, brickwork or other external surfaces and, while they may be unsightly, they don't generally affect the safety or structure of the building, and therefore tend to be regarded as minor defects
  • Efflorescence: the technical word for the surface powdering of bricks and stonework and, much like surface cracks, can be unattractive but isn't usually dangerous as it's merely salts coming through the masonry, however it can be an indicator of more serious moisture somewhere
  • Gaps: such as in timber flooring, which are minor in nature
  • Breaches of waterproof membranes: these usually aren't as serious as a major roof leak, and will often simply result in water staining. They're an annoyance but generally not a major defect, though when they lead to mould, and then breaches could potentially cause a building to become uninhabitable or unsafe for health reasons.

See reference [1]

Who is responsible for construction defects?

It is the responsibility of the body corporate to check for and identify any defects (usually via a specialist building inspector) and then notify the builder. The onus is then on the builder or their contractors to rectify the problem.

Within almost all construction contracts in Australia, there will be a clause dealing with the rectification by the builder of minor and major defects within a specified 'defects liability period'. Usually, the liability period for minor defects is between 12 and 24 months, but they can be longer or shorter depending on the terms of the contract, and local building laws . On the other hand, because some serious problems may be hidden or 'latent' for years, the liability period for major defects in a strata property can be up to six, seven or even ten years, depending on your state's building, consumer and fair trading laws.

All mainland states require builders to take out builders' warranty insurance on buildings up to three storeys high, so body corporates in these lower-rise properties can investigate that avenue.

For taller buildings, government authorities (e.g. Queensland's Building Construction Commission) or schemes such as the New South Wales Strata Building Bond may help, but elsewhere, chasing up builders to fix defects can be a costly and time-consuming exercise. That's why it is important for body corporates to engage suitably qualified building inspectors to check properties regularly - especially during the defects' liability periods.

Five-step plan for managing defects.

  1. Check to see what your strata insurance says about defects. Most standard strata insurance do not include cover for defects, as this is usually the builder's responsibility, however
  2. Use the defect liability period well, with regular thorough inspections by experts and a clear list for the builders
  3. Make use of your defect exploration cover if you have it
  4. Enquire about your builder's warranty insurance if you're building is eligible, and also look into government schemes, and agencies and fair trading laws if appropriate.

Find out more about Flex Insurance's residential strata insurance offering:

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