In the past twelve months, there were three incidents reported in Sydney where apartment buildings have been evacuated because of defects, prompting questions about the consumer protections available for buyers of high-rise units.

In December 2018, the Opal Tower at Olympic Park was evacuated after cracks appeared in some walls and contemporaneously residents at Gadigal in Zetland which were built 10 years ago were ordered to evacuate over extensive and severe water damage which made the building non-compliant under the state fire codes. Earlier this year, it was revealed that residents at Mascot Towers were ordered out of the building for the same reason as reported in the Opal Tower incident.

The three incidents have highlighted what industry experts have labelled as a lack of regulation. Contrarily, the Owners Corporation Network spokesperson, Stephen Goddard commented that there has been a “conspiracy of silence” around building defects for years due to confidential legal settlements and owners’ fears of damage to property values. In some cases, developers or builders who have completed their developments would then liquidate their companies to avoid paying taxes such as Goods and Services Tax (GST) and in other cases to avoid warranty claims as demonstrated in these recent incidents.

In response to the catastrophes reported above, we suggest prospective buyers conduct proper due diligence prior to entering into a contract to purchase a strata property. The suggested due diligence steps are as follows:

  • Look for a sinking-fund forecast in the strata report, plus any planned or completed remedial works.
  • For existing apartment complexes, conduct a body corporate records search.
  • The search should outline recent annual meetings and information on the sinking fund and any planned and completed capital works projects.
  • Find the builders’ previous projects and go and inspect them in person.
  • Don’t buy an apartment in a complex more than three-floors high.
  • Buy an apartment more than 10 years old but there is still no guarantee as demonstrated in the Zetland incident (this property was more than 10 years old).
  • Have an independent building inspection completed.
  • Engage us to review the Strata Report and we will have a solicitor and an accountant review it in detail.

If you are considering purchasing a property, be sure to contact The Quinn Group on (02) 9223 9166 or submit an online enquiry so that we can assist you with the necessary due diligence checks and provide you with our professional advice for consideration before you decide to proceed with the purchase.