Grenfell Tower Aftermath !

2012 is a critical date for owners of apartments fitted with the type of outer cladding that caused the Grenfell Tower tragedy in London.   In New South Wales it looks like the owners of buildings completed before that date are stuck with the entire rectification cost and that can run to millions of dollars.

This type of aluminium and plastic foam decoration is now banned in this state and that ban applies retrospectively.  Corporations can be fined up to $1.1 million and individuals up to $ 220,000 for installing it, but the building warranties in force apply.   Since this cladding is recognised as a major defect, building owners have the right to require the builder to make repairs for up to six years after completion.  It is therefore unclear if owners of buildings completed before 2012  have any legal recourse at all.

This is despite a plethora of laws that are required before a new building is signed off as meeting the required certification by council building inspectors, government officials and the fire brigades.  This cladding was not illegal at that time, but it did not meet the standards required in the building code and therefore the area of responsibility is unclear.  That is yet to be decided in a court.

The NSW Cladding taskforce has identified four hundred buildings, half of which are residential, which have this cladding and the completion dates are yet to be established.  Owners are finding insurance difficulties because this added fire risk is now a matter to be  taken into consideration when establishing the cost of insurance cover.

This is fast becoming a legal nightmare.  The cladding is present on part of one building and just 85 apartment owners are directly affected, but all 200 owners face an equal share in the rectification costs and will be served with a special levy.  Their present output of $3000 per quarter will increase to $10,000 and remain for five years.  Obviously, this will have an effect on the sale price should owners wish to sell.

Even where the building meets this 2012 demarcation the rectification depends on the builders ability to pay. Should that company go into liquidation the unit owners simply become similar to the sub contractors awaiting a distribution from whatever can be recovered from the financial wreck.   Usually this amounts to just a few cents in the dollar.

In Victoria low interest loans are on offer to help strata owners not covered by any existing provisions to pay for remedial work.  So far, the legality of costs shared by councils and fire brigades which signed off on building probity has not been tested in court.   It is very obvious that all parties concerned are ducking for cover and nobody wishes to be the litigant who may end up having to pick up the tab for the legal costs of such an action.