A couple had bought an apartment in a unit titled complex as part of their retirement plan.  When they bought it there were no known weathertightness issues with the complex.

Years later, a unit on the other side of the complex started to leak into the two units below.  Invasive reports showed the source of the problem was the cladding, and recommended a full replacement of the cladding on the Western side of the building, where the current problem had arisen.

The couple were told by the Body Corporate that they needed to pay their share of the cladding replacement based on their utility interest, even though their apartment was East-facing and not currently experiencing any weathertightness issues.  They sought legal advice.

Who pays for repairs?

A common question that arises in the context of unit titled property is who is responsible for paying for maintenance and repairs.

Simply put, it is the responsibility of the Body Corporate to repair and maintain the common property and any building elements and infrastructure that relate to or serve more than one unit, under section 138 of the Unit Titles Act.  Owners are required to meet the cost upfront, based on their utility interest in the building, and the Body Corporate can then vote on whether to reallocate the costs after the work has been completed.

Building elements are things like cladding, the roof, decks and other external components of the building, and infrastructure is things like pipes, wires, gutters and conduits within the building. 

The Body Corporate above is therefore correct to say that all owners need to pay their share of the cladding replacement in this scenario in the first instance.

The Body Corporate must levy for the work under section 121 of the Act based on utility interests. Utility interests are the same as ownership interests unless they have been reassessed by the Body Corporate.

Once the work is complete and the levies paid, the Body Corporate can then consider reallocation under section 126 or section 138 of the Act.

Recovery under section 138

Under section 138 of the Act, any costs incurred by the Body Corporate that relate to repairs within a principal unit can be recovered by the Body Corporate from the owner of the unit at the time the repairs are carried out or the owner at the time proceedings are instituted to recover any such costs.  Generally in practice this is used for repairs inside the relevant unit that flow from the exterior repair.

Recovery under section 126

Section 126 allows reallocation based on substantial benefit, after work has been carried out. 

If one or more of the units substantially benefits, by a distinct and ascertainable amount, from the repairs or maintenance as compared to the other units, they may be reallocated a higher share of the costs if the Body Corporate votes to do so.  This would often practically be done by way of a credit to some owners’ ledger balances and deduction from others.

There may be cases where there is a different owner at the time the work was carried out compared to the time when the action was brought by the Body Corporate for recovery of the amount reallocated to the owner for the repairs.

The owner at the time when the work was carried out and the owner at the time of the action being brought are jointly and severally (separately) liable for the debt owing, if the amounts are recovered in the Courts.

In cases where a property is sold soon after work has been carried out it is recommended that a clause be added to the Agreement for Sale and Purchase regarding how any reallocation of costs will be dealt with after settlement.

Whole of building approach

The law tends to approach disputes about allocation of costs by considering the whole building and the interests of all the owners, known as the ‘whole of building’ approach. The Courts generally maintain that it is in the interests of all owners to have a weathertight building which increases the value of all units over time.  Those apartments in the building that don’t have leaky issues now may have them in their apartments later (as often similar issues with arise throughout a building over time).

Often this means that most costs of repairs are not reallocated, as it is fairer over time that everyone pays their share (via utility interest) each time.

Conclusion

It is vital to take legal advice when unsure about responsibility for maintenance in a unit titled building, or making a decision to reallocate costs as it is a complex and commonly misunderstood area.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.