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Neighbours, everybody needs good neighbours ...

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:

  1. common property;
  2. an element of the building or infrastructure that services more than one unit; or
  3. 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

Kay Keam

 

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