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Managing Building Defects: No Builder? No Problem. A Strata Plan Case Study

WHERE THERE’S A WILL, THERE’S A WAY | HELPING AN OWNERS CORPORATION MANAGE AND RECTIFY BUILDING DEFECTS

Strata Plan believes that Owners Corporations work best when owners take an active interest in their property and work collaboratively with all stakeholders to co-create amazing outcomes.

And when it comes to amazing outcomes, it does not get much better than having $100,000s worth of building defect rectification for mere $1,000s.

For some property owners, this might sound like a miracle, but for lot owners in a 19-lot apartment complex in Ormond, it has turned into a reality.

Oh, and did we mention the original builder had gone bust?

The hard work of active owners and their willingness to work within the processes available to them alongside key stakeholders, such as Strata Plan, building consultants, trades and more, delivered this outstanding result.

So, how did they do it?

Read on and check out our in-depth video below to learn more about this Owners Corporation’s remarkable story and hear from the property’s chairperson, David, and Strata Manager, Tania, about how true collaboration between owners and manager alike worked out for all.

LEARNING CURVE

When balconies resemble waterfalls every time it rains and the basement resembles a pool, something’s not right.

With the original builder bust and out of the picture, this 19-lot apartment complex was facing a range of challenges.

Dr. David Winkler was not aware of the bubbling disputes over water leakage, or the basement’s habit of flooding whenever it rained when he purchased his apartment in 2016.

Like most apartment owners, he was attracted to his property because of its price, its location and its immediate surrounds.

The very concept of an Owners Corporation and his impending membership of one, was a million miles from his mind.

“I knew there was an Owners Corporation and sometimes they might have a sinking fund and they looked after the common areas, but basically I knew nothing about it,” David said.

A scientist by occupation, David was naturally curious and an Annual General Meeting would prove the perfect opportunity to learn more by attending the meeting with the aim of joining the Owners Corporation Committee.

“At that AGM, the previous chair wasn’t a resident and there weren’t many people there but those that were there seemed to want a resident as chairperson, and I thought that would be an interesting way to learn more by at least joining the committee,” he recalled.

“I was the last person to step backwards when it came to appointing the chair, so I became the chair.”

David quickly dove into the role, looking to understand more and more about the Owners Corporation’s role in the management of his property and how he, as chair, could help make his home a better place for all its inhabitants.

Looking at other properties, David quickly surmised that Owners Corporations are plagued by a lack of owner involvement, something which he felt was seen at his own property with such a low turnout of owners.

“That surprised me because I’m thinking you’ve got this property and it’s a big investment. It’s probably the biggest investment you have and if you’re not going to pay attention and keep maintaining it, the value of your property could go down,” David said.

“I didn’t want that to happen to me, so I thought I better do something about it.

“I’d started looking around at some other properties and found that most properties really aren’t that well maintained, so the Owners Corporations don’t seem to be paying a lot of attention.

“[The role of chairperson] was a bit of work initially because I wanted to learn enough to do it properly and there were some things we weren’t happy with when I came on board.

“The way I deal with that is I expect certain things to be done and if they’re not happening, I’ll be on your case a couple of times a week.

“Tania came on [as the property’s Owners Corporation manager] a few months after which was fantastic.”

WORKING TOGETHER

Strata Manager Tania Krecul took over the management of the Owners Corporation in question in 2016 and instantly knew she was working with a chairperson and committee with a strong, cohesive attitude to working through its problems.

“Some of the issues they faced at the start were some issues with the pavement and the tiling which runs down the side of the property.

“There’s also been issues with the wet basement as well, there’s been pooling in the basement and the stairwell as well as issues with the toilet in the basement as well.

“I’ve really just been working hard with the committee to try and resolve these issues.”

WARNING SIGNS

With the initial business of reviewing the various contracts the Owners Corporation had in place quickly sorted, David, his committee and their Strata Manager Tania turned their attention to a number of pressing items around the building.

A number of balconies appeared to be degenerating at an alarming rate, with a number of leaks being reported throughout the building.

Bathrooms which had no proper membrane was another major issue in people’s private lots.

In the basement, a lack of appropriate draining meant frequent flooding, while there was also an issue with the footpath down the side of the property.

Compounded by the fact that there was no builder to chase anymore David and his committee were keen to learn more about the state of the building and start planning for works that may be required.

Thankfully, as the building is less than three storeys high, the building was still within its Domestic Building Insurance cover period with the Victorian Managed Insurance Policy.

However, while a claim was possible, the building was quickly closing in on it’s seven-year deadline.

With the clock ticking, the Owners Corporation had to work fast.

“The builder had gone broke and the seven years we had to make a VMIA claim was coming up,” David said.

“It was hard because you had to get every owner involved.”

Tania said because a lot of the claim would be private in nature, particularly lot owner’s private balconies, each owner had to produce their own documentation and file their own claims.

EARLY SET-BACK

Initially, the Owners Corporation attempted to at least resolve the issue of the pavement down the side of the building, but their application was rejected on the grounds that the path was not a structural defect.

“Prior to my involvement, I know the committee tried tyo lodge a claim to the VMIA for the repairs of the pavement down the side of the building which was unfortunately rejected, so maybe that didn’t leave them with the best impression of that process,” Tania said.

“But that was sort of the beginning.

“The committee’s reaction to the rejection was positive. They were just really proactive. They knew the works had to be done regardless so together we organised those works to be done.

“Obviously no one wants to spend that sort of money, but they just got it done. Dave, the chair, was fantastic. He helped us sort so many quotes, he was meeting the contractors on site and really getting into the nooks and crannies of the whole process.

“He saw it through to the end.”

GETTING SERIOUS ABOUT DEFECTS

While the issue with the pavement played out, it was apparent that the condition of the balconies and the bathrooms in private apartments was worsening.

The committee sent a number of contractors to fix a range of issues, but never felt as though they were getting to the bottom of the issue.

Knowing that something was wrong with the building was not enough. For the VMIA claim to be accepted, the owners would have to provide evidence that the issues were the by-product of building defects.

Tania advised that commissioning a licensed building surveyor to attend the site and provide a thorough building defects report was the best way to go.

Doing this would give the committee a full picture of any issues the building was facing and ensure the Owners Corporation was best placed to have a common property claim accepted by the VMIA.

“We knew the balconies at the front were leaking because you can see the lime leaking down the balconies,” David said.

“In the basement it didn’t seem there was adequate drainage because there was always water pooling whenever we had any rain, so that was always a problem too.

“So we knew there were issues but Tania recommended that for a modest amount of money to get an expert to come in and inspect the building from top to bottom.”

While inspecting the building’s common property was important, Tania recognised that it was important for any owners wishing to lodge a claim for their own private property, including their balconies and bathrooms, also have their private property inspected.

“We were able to negotiate with Buildspect, who was doing the common property report, that if lot owners arranged access to their private lots on the days the common property inspections were taking place, they could get their individual reports done at a cheaper rate,” Tania said.

“We got quite a lot of traction and I think we had half the lots get a report done and they were able to make their private claims.”

MAKING THE CLAIM

With mere months to go before the Owners Corporation’s deadline to have their claims considered by the VMIA and defects reports on the way, the hardest part was arranging all the paperwork.

For the VMIA claim to be expected, all owners were required to produce various types of documentation from their purchase of the property.

“It wasn’t easy,” Tania said.

“We had to gather every single person’s occupancy permit for their particular lot. I needed their certificate of currency and the VMIA wouldn’t accept the claim unless I had every owner’s certificates.

“So getting people to go back to their solicitors, conveyancers or council to find these contracts of sale and these certificates from six and a half years ago was the most time-consuming part.”

With all the paperwork coming in, the next step was just a matter of filling out the claim forms.

“The defects report gave me a clear run down of what the claim was for so I just transferred that to the claim form and every lot owner filing an individual claim was able to do the same,” she said.

Owners Corporation chairperson Dave said Tania’s work made his role through the process considerably easier.

“Tania really managed most of it, which was great. She contacted all the owners and got everything they needed. There was a lot involved,” he said.

“She co-ordinated getting all that together and we discussed it quite frequently so that together we could make sure that the claims went in.”

By the end, there were several claims made to the VMIA. One for the common property, concerning the various drainage issues in the basement, as well as several private claims for private property.

WHAT WAS ACCEPTED?

“As far as I know, all the private claims that were put in were accepted,” David said.

“There were some things they didn’t accept, like front doors because they didn’t think it was a building defect, but the major items like bathrooms and balconies were accepted.

“In the common property, there were some very minor things they didn’t accept like bits of plaster missing or a missing brick that wasn’t causing a structural problem and that was fair enough, but the major issues were accepted.”

Tania said the approved works – both private and common – were significant.

“They didn’t have a lot of drainage in the basement and to make it worse the storm water drainage was being offset into the basement too, so whenever they had rain the basement would just flood,” Tania said.

“They’ve grinded into the basement floor to create more adequate drainage and they’ve corrected all the pipework on the outside face of the building too.”

WHAT WAS THE COST TO THE OWNERS?

All approved works were paid for by insurance with owners only having to pay $1000 in excess for their individual claims.

The Owners Corporation also had to pay an excess of $1000 for the common property works to be done.

“I understand that if you had works done on your bathroom and balcony, the works were valued at around $30,000 per apartment,” Tania said.

“The works on common property were valued at $60,000, so it was a great result for the owners.”

The only other significant cost to the Owners Corporation and individual owners was the cost of the defects report.

But this result was only possible thanks to the teamwork of the committee, the owners, the Strata Manager, the building consultants and of course the builders who carried out the works.

“The work of the owners and committee especially is integral to the success,” Tania said.

“Without having everyone on board it wouldn’t have gone anywhere and it wasn’t just getting on board it was getting on board quick.

“There was a lot of trust between the owners, the committee and myself.”

Chairperson David said the cost of the report was a no-brainer when you considered the potential costs had they not got the report done.

“If you work it out per apartment, it was a fairly trivial amount of money,” David said.

“If we had uncovered a major defect that might have cost us $100,000 in the future if we didn’t know about it and it got worse, then that would have been terrible.

“The report is really cheap insurance to get a picture of your building’s health.

“I’m not a building expert so it’s just good to know what’s in your building and get it fixed instead of not to save a bit of money and then it biting you in the future.”

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