London’s Grenfell Tower went up like a torch in June 2017. Seventy-six people were trapped and died and hundreds were displaced for months. All told, one hundred and fifty-one homes were destroyed.

So, when Sydney’s 36-storey high rise, Opal Towers, began to groan and crack on Christmas Eve in 2018, almost 3,000 residents evacuated in fear. Not a good place to sleep, let alone a terrible investment.

Owners who were able to return after the Christmas Eve incident were forced to evacuate again only several days later.

Subsequent investigation revealed a number of design and contract issues, including “lower strength concrete” and “under-designed critical support beams.” Significant work will be required to repair the damage and prevent further deterioration. Many of the apartments remain uninhabitable.

This is a tale that smart property investors should take to heart. It is clearly in everyone’s interest to improve compliance with construction codes and to decrease the dangers of defective design and construction. The disputes arise when it comes to assigning specific responsibility for compliance and defining where liability should rest.

There are several steps property purchasers can take to protect themselves.

Basic precautions

At a bare minimum, buyers should insist on an inspection of the apartment and common areas by a building consultant prior to settlement. Completion of the sale should be conditioned on the satisfactory outcome of that inspection. In addition, purchasers should ask the developer and builder for copies of the council-approved plans, as-built plans and building certifiers’ inspection reports.

Contract protections

If you are buying off the plan, your contract should:

  • describe the building to be constructed and the materials to be used as specifically as possible;
  • require the developer to provide copies of certificates of currency of the professional indemnity insurance carried by the design consultants on the exchange of contracts and before completion;
  • name and describe the qualifications of the certifier who will provide the occupation certificate; and
  • require the developer to provide the certifier’s statement and copies of all underlying compliance certificates on which the occupation certificate is based.

If nothing else, these steps may simply be a proactive preparation for a lawsuit and may put the developer on notice that you are a consumer to be reckoned with.

Legislative protections

Ultimately, effective reforms in the building construction industry will likely require legislation at both Federal and State levels. Among the options being explored are:

  • moves to strengthen the independence and raise the standards of private certifiers;
  • requiring building plans to comply with the Building Code of Australia;
  • appointing a building commissioner responsible for enforcing new legislation by auditing practitioners and conducting random building inspections;
  • amendment of the Home Building Act to increase the bond requirements for structural defects in residential properties; and
  • permitting unit owners in multi-storey buildings to band together to sue developers for neglecting a duty of care.

What protections do purchasers have when construction issues arise? What if a building becomes uninhabitable? These are important questions that a property investor, especially one buying off-the-plan, must ask.

If you are considering buying property either for investment or to make your home, the attorneys at Owen Hodge Lawyers would be happy to advise you. Please call us to schedule a consultation at 1800 770 780.

Did you know that all property transfers are going electronic in NSW? Read all about the new process and why on the Owen Hodge blog.