On 20 November 2024, the Strata Schemes Legislation Amendment Bill 2024 was introduced to Parliament.
The Bill proposes to implement several recommendations from the statutory review report prepared by the Department of Customer Service in November 2021.
The changes implemented by the Bill include:
- increasing disclosure obligations for strata managers and increasing oversight over strata management agreements
- introducing a new statutory duty on building managers to act in the best interests of the owners corporation
- introducing new duties for strata committee members, such as the duty to undertake training, to improve committee governance
- increasing accountability for developers relating to initial maintenance and handover, including an accumulating penalty for failing to provide construction documents and records to the owners corporation at the first AGM.
Significantly, the Bill also proposes to amend section 106 of the Strata Schemes Management Act 2015, which places a strict obligation on an owners corporation to repair and maintain the common property.
This obligation permits owners to bring claims for damages against the owners corporation for "any reasonably foreseeable loss suffered by the owner" arising from a failure to repair and maintain the common property. A common example of this is a failed waterproofing membrane causing water damage to an owner's lot.
The damages claimable under section 106 are very broad, and may include things such as direct repair costs, replacement of damaged furniture and loss of rent.
Currently, an owner may only bring an action against the owners corporation under section 106 within two years of the date that the owner first became aware of the loss.
If enacted, the Bill will extend this statutory limitation period to six years. This significantly increases the exposure an owners corporation faces, as the current limitation period is the primary method by which an owners corporation can avoid an otherwise meritorious claim, particularly those relating to latent defects.
Notably, the extension broadly aligns with the longer of the statutory warranty periods under the Home Building Act 1989 to back to back claims. Perhaps arguably, post the introduction of the Design and Building Practitioners Act 2020, there is a policy argument that it should be even longer.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.
