costs for rectifying any defective building work

September 9, 2021
Effective Building
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Managing defect rectification works can be challenging for some reasons. First, the strata committee members are rarely building experts and may be unfamiliar or new with the responsibilities of their roles in work management.

Positive outcomes need collaborative work, which can be exhausting and time-consuming when managing personalities, stakeholders, and multiple needs.

Organising the Works

The one who will be responsible for organizing the works depends on the defects’ nature and location. The Owners Corporation must take responsibility for the defects affecting the common property. But they can also get assistance from the strata manager or project manager.

It’s important to note that the Owners Corporation must determine the cost payable by owners to the capital works and administrative funds and approve a decision to acquire legal advice if it’s anticipated to cost more than $3,000, or the urgent work that’s over $15,000. These decisions are made by the typical resolution at the general meeting.

Otherwise, the following people can assist with tasks related to building defects rectification.

Strata Committee

He will decide on behalf of the Owners Corporation. Minor building repairs can be fixed without a need for a committee meeting, but larger repairs need to be decided at a strata committee meeting.

Strata sub-committees can be created to assist with the defect rectification process they don’t have the power to decide. They should report recommendations to the owners corporation or strata committee so that decisions can be made.

Strata Managing Agent

Depending on the owners corporation, the strata managing agent can delegate the decisions on remediation of defects. However, any decisions that the strata managing agent makes on the owner corporations can also be overruled by them.

Under Part 4 of the Strata Schemes Management Act 2015, if the agent is negligent in their duties and made decisions excluded in the agreed management contract, they can be found liable.

Strata Manager

If the scheme has a building manager, he can be accountable for the work schedule and access to apartments for the builders. The building manager cannot decide beyond the functions stated in the building manager contract/agreement.

Project Manager and Hired Experts

Hiring a project manager or rectification expert will be the one who is responsible for work supervision and builders’ liaison, work documentation, strata committee report, and work quality check upon completion.

Common Concerns

Managing funds

By law, the owners corporation need to manage two different funds:

Administrative fund for daily management and property maintenance.
Capital works fund for replacement and repair of common property.

These funds are maintained through strata levies by the owners corporation. The cost will determine the contributions agreed to at the annual meeting of the owners corporation.

Defects rectification work can be funded through the administrative fund, but the greater cost defect works will be funded through the capital works fund.

If there are inadequate funds to cover the defect rectification, the remaining costs will be covered by the owners corporation through the owners corporation or a special levy taking out a loan.

According to City Futures Report, strata residents don’t like to pay higher strata levies, which resulted in inadequate funds for running the building to cover the costs for emergency repairs and structural defects.

Costs for major capital works should be considered in the scheme’s budget. Using special levies to fund the major capital works can catch owners by surprise can cause distress. Moreover, future costs were also difficult to estimate.

Hiring experts from Effective Building & Consultancy can help you make an estimated cost of maintaining and rectifying issues in your scheme.

For inquiries, call us at 02 9613 3353 and one of our staff will gladly assist you.

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