By Kay Keam - 31 May 2013
As our cities move toward greater numbers of high density
residential property, ownership in unit title developments is set
to increase. An ideal scenario for some; but not for those who
discover construction defects such as leaky building syndrome. At
times like this, you really do need good neighbours.
Conflict and tension between owners faced with huge repair bills
and uncertainty around cost allocation is inevitable. Owners
can often find themselves isolated either when others refuse to
acknowledge problems or take independent action for repairs without
considering the rights of the unit owners as a whole.
When faced with such a situation the first step in understanding
your potential liability for repairs will be to identify whether
the part of complex in need of repair is:
- common property;
- an element of the building or infrastructure that services more
than one unit; or
- individual unit property.
Generally speaking the body corporate must maintain or repair
common property, building elements, and infrastructure. A
unit owner maintains his/her own unit. Allocating the costs
of the body corporate's repairs is not always as
straightforward. Repairs to common property are generally
divided on an ownership interest basis unless a repair scheme under
section 74 is approved by the courts. Provisions within the
Unit Titles Act 2011 (UTA) that are now
universally in force (section 138) allow the body corporate to
recover costs of repairs to infrastructure or building elements
from the unit owner within whose unit the element/infrastructure is
contained, or from others who also benefit.
On determining the nature of the property in need of repair, an
analysis of your body corporate rules will determine whether any
contrary arrangements to those set out above have been implemented
for your body corporate. Even if such arrangements are found
to be ultra vires (illegal) those rules may have created a
legitimate expectation among owners as to how repair costs will be
shared and still be binding. This may be relevant in reaching
any agreement between owners.
Where agreement cannot be reached in relation to repairs or
reinstatement, the next step could be an application to the court
for approval of a section 74 UTA scheme. The principles applied by
the courts in considering such schemes include an acknowledgement
that it is preferable for the scheme to have the broad support of
owners and that in general remedial work should be done at the same
time and to the same standard. The courts will only allow a
departure from the statutory scheme for division of costs and from
a body corporate's rules to the extent that it is reasonably
necessary to achieve what is fair between unit owners in the
circumstances.
Unfortunately, it is all too common for owners to find
themselves faced with ever-increasing levies on the back of illegal
resolutions, inadequate governance of the body corporate itself and
repair plans that fail to consider fully the interests of all the
owners.
There are many complex legal questions that ought to be
addressed at an early stage once defects are discovered to ensure
that appropriate resolutions are passed; the interests of all
owners are protected; and ultimately so that good neighbours can
remain good friends.
Contact us for advice and guidance in relation to your specific
situation.
Contact
Elise
Markwick