Serious Structural Faults: The New Normal in Strata Buildings
The latest strata building in the news highlights difficult building defect issues …
[4.5 minutes estimated reading time, 845 words]
Introduction
We’re seeing more structural faults in strata buildings these days and this ABC News report highlights another instance in a large Sydney development.
According to the reporting, Toplace Group's Skyview 960 apartment complex in Castle Hill is under review by NSW Fair Trading amid the discovery of ‘structural issues’ that will require ‘specialist engineering advice’.
It also appears that the structural issues in the building first arose in January 2020 and there’s been ongoing investigations and works for over 1 year now.
You can read the article ‘Fair Trading inspectors find 'structural issues' at major Sydney apartment development’ by Josh Bavas here.
What does this defective strata building news reveal?
This news about this strata building is instructive as it highlights [to me at least] the complex issues sitting just below the surface of strata building defects [not that the surface issues affecting strata building defects aren’t difficult enough].
Here are just a few of them.
There’s undoubtedly going to be an ongoing debate amongst the various engineers about the structural integrity of the building before things are resolved. And, since much of the engineering analysis and resulting opinions will be theoretical, there’s likely to be divergent views between them. So, everyone will be left trying to reconcile the divergent expert views about the building’s future structural integrity with an inevitably hedged compromise being the most likely outcome.
After all, you’ve heard the adage ‘ask one expert’s opinion and you get an answer; ask 2 experts’ their opinions and you’ll get 3 answers’.
This situation is probably going to test the NSW Building Commissioner’s work, powers, and resolve in ways that I explained in the article ‘The NSW Building Commissioner’s Hard Hat Brigade in Action’.
Will building work rectification and/or prohibition orders be issued by the NSW Building Commissioner? What will be required if the engineers disagree?
Will this developer dispute any orders or decisions made by the NSW Building Commissioner given the size of the development and likely sale settlements that will be held up [remember that it took more than 1 year to resolve the Opal Tower structural issues adequately to allow people to re-occupy the building]?
Or, if occupation certificates were issued by the certifier, is the NSW Building Commissioner powerless to do anything?
There are quite a few competing stakeholder interests at play and that are no easily reconciled here including:
a developer who wants to settle a lot of apartment sales sooner than later,
many buyers who want or need to settle their apartment purchases for personal and financial reasons,
a private certifier whose actions so far and in the future will be closely scrutinised,
a future strata owners corporation and manager who will take over the strata building but has no say in what’s going, and
future strata owners that will need to deal with any long term structural consequences that aren’t properly resolved now [remember the unresolved fate of our strata friends at Mascot Towers more than 10 years after that building was completed].
That’s a difficult balancing act in any circumstances.
Sadly, historically in New South Wales, the government’s decisions have always favoured more property development, lower liability exposures and fewer strata owner rights.
What about the off-the-plan buyers? Who is representing them and their interests in the outcomes for the strata building’s structural issues? After all, they will be the future owners who will inherit and have to deal with the results of good, poor or no decisions.
In reality that stakeholder group has no say in what is happening, not entitled to information and cannot avoid their sale contract obligations. So, they stay bound to their purchase contracts for a building they now know has structural issues but can’t weigh in on the decisions made and actions taken.
Perversely, those off-the-plan buyers also face the prospect that if the issues are delayed past the sunset dates in their contracts in a rising property market the developer could terminate them to resell the apartments at higher prices.
Sounds like the buyers might be screwed either way.
What, if any protections are there for the strata building if everyone gets the structural issues wrong here and the same or similar structural re-appear later.
Does the strata building have more or fewer rights to recover from the developer or builder since they have done what the NSW Building Commissioner told them? Or, does the strata building accrue new and separate rights against the NSW Building Commissioner for their decisions [or failure to make decisions]?
Sadly, even if the strata building has the same or more rights, I can also foresee interesting [read complex and costly] legal arguments about those matters in the future.
And why isn’t anyone reminding the government and other stakeholders that if Home Building Insurance applied to buildings that are more than 3 storeys high this situation would be a lot easier to manage and better for everyone?
Or, has that ship sailed forever. And, if so, why?
Let’s watch this strata defect saga play out in Castle Hill and see who wins and loses.
May 17, 2021
Francesco …