When a residential building collapses, who is responsible? – Real Estate and Construction

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Australia: When a residential building collapses, who is responsible?

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There will undoubtedly be an investigation and findings into the cause of Miami’s building collapse – which claimed lives, caused injuries and left survivors homeless on the streets.

Consider for a moment who would be responsible for avoiding a similar situation here.

Inevitably, there will be a debate about the cause. The issue of faulty building design and construction has been the subject of many separate comments in Australia over the past two years, so we will not repeat it now.

Suppose, however, that there were cracks and there were obvious concerns, and determine who would be responsible if a similar situation were to occur here, where most residential buildings are owned and managed by a company. of strata owners.

Subject to certain exceptions for matters which do not affect safety or structure, a company of owners has a legal obligation to properly maintain and maintain in good condition and in good working order the common property. Of course, if a building collapsed, the assets of the Owners Corporation could be a pile of rubble and not be of much value. In such a situation, attention would turn to the accountability of the members of the strata committee, who control the day-to-day actions of a company of owners, often in conjunction with a licensed professional strata manager.

Each member of the Strata Committee has a legal duty to perform their duties for the benefit, to the extent possible, of the owners’ society and with due care and diligence. However, an officer or member of the Strata Committee may be protected for acts (or omissions) performed in good faith in pursuit of their duties. This protection may not protect a Strata committee member or agent if he or she has not performed a function or acted in good faith.

This should be a wake-up call to members and leaders of Strata committees who, despite the inevitable pressure to keep costs and levies low, are at risk if they do not ensure the proper reporting. are obtained and implemented.

There are, in fact, signs that these risks are being taken. On July 3, the New South Wales building commissioner said less than 20% of defects requiring legal notice were notified.
1 It is truly alarming.

It is also important to note that committee members and owners cannot rely on insurance when there is a known problem, since an insurer is not obligated to respond to a claim as long as they do not. would not have provided the coverage in the first place if the insured had disclosed known issues.

Strata Managers can also be pressured, particularly in buildings with a high percentage of investors rather than owner occupiers, to reduce costs and defer necessary capital expenditures, and not to raise issues that could reduce the perceived value of buildings.

A clear lesson from the Miami tragedy is that these things can and do happen, and that there is a shared responsibility, especially for members of the Strata Committee, to process rather than postpone notifications and the necessary investigation expenses, in order to better protect the safety and the structure.

Footnote

1https://www.smh.com.au/national/nsw/construction-watchdog-body-corporates-are-not-reporting-known-defects-20210630-p585hh.html

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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