Building defects fall squarely on “investors who do not have the same sophistication”: Grace Lawyers

A recent High Court decision has interesting implications for strata property owners, particularly in reference to commercial buildings and defects discovered down the track.

Grace Lawyers represented an owners corporation in a case where the investors sued the builders for negligence in defective building work. The noted that the ruling found that the owners corporation was not ‘vulnerable’ when the commercial building was built. This means the rights that existed were between the developer and the builder, and later the developer and the first unit owners to purchase.

Grace Lawyers’ Colin Grace says this has implications for all commercial, retail and industrial complex owners corporations.

The finding noted that those who purchased first, usually off the plan, could bargain for anything they wanted, including warranties over defective works. If they did not do this, then complaining later through the owners corporation isn’t necessarily an option, explained Grace.

Grace said it affects the fundamental rights of the land owners to take action.

“What it means is that anyone who wants to buy into these strata schemes needs to contract with the original developer to obtain any rights over defects (which may manifest itself years into the future – as in this case). If they don’t, then too bad,” said Grace.

He said the owners are mum and dad investors without the sophistication level of the builders and developers. Having bought a purpose built building, they face costs to rectify defects years later.

According to Grace, “urgent retrospective legislative intervention to protect the rights of owners” is needed.