Common property – OC building works – loss of rental to unit owner

@Whale said:
So again check your O/C’s policy because if it includes that cover as an appended “special benefit” your loss would be claimable in those specific circumstances, but otherwise the O/C is not legally liable.

At the risk of taking on the mighty Whale, I think there’s a subtle difference between the OC being ‘liable” and being covered.  The insurance isn’t likely to cover them if they’re not liable.  However they could be liable but not covered.  All that means is they would have to cover their liability themselves. And I would say they are liable to some extent and unless it’s a very small block, it’s probably worth pursuing.

However, there is no clear mechanism for this and Rita C would need to make a claim  – send them a bill – in the first place an see where that got her.

If you had a stand alone property which you rented out, and similar works were required to it with the same effect on your tenant(s), what would you do? Who would compensate you?

@Rita C said:
This work, which is covered under home warranty insurance … will result in the relocation of the tenants, for which insurance is provided, and loss of rental as a result. 

I have just re-read this – am I missing something or is loss of rent covered by this policy and, if so, what’s the question?

@Rita C said:
The additional comment (which is incomplete) must be read in conjunction with the original question, at the bottom of the page.

There is specific provision in the home warranty insurance policy for payment by the insurance company of the cost of alternative accommodation, removal and storage costs, BUT no specific provision in relation to consequential loss of rent, which will result if the tenants are required to vacate the unit or if they remain in occupation at a reduced rental 

OK, I think that’s much clearer.  There is nothing specific in strata law about this that I can see.  I would say your best way forward is to make a claim in as friendly a way as possible that outlines your potential loss and see if the insurance company or the Owners Corp comes to the party.  Regardless of some of the other comments here, I think they should and if they do, then all well and good.

If they don’t, you have to look at how much you are going to lose and talk to a lawyer about your chances of winning a claim for compensation in court

The problem or question posed by RitaC sounded like what i face at present. The tenants moved out (according to managing agent from being pressured by builder). rental loss not covered by landlord protection, and since roof defect is a common property repair, all units in that affected building should be liable equally to compensate the top level affected apartments for rental or personal loss, in addition to just “routine compensation”. 

would you suggest that all affect unit owners to have a meeting with strata to deal with this problem? or we each personally seek our legal advice?  

This is an interesting but perplexing question.

First, I don’t think Boronia’s comments should be so easily discarded. Legal questions are often resolved (and sometimes justice delivered) by reference to analogous situations.

If you owned a free-standing house and this situation arose, you would be faced by two types of cost: the cost of repairs, and the loss of rent while they were undertaken.

In strata living, owners have agreed to share the cost of repairs. That’s specified in the Act. If the roof caves in due to old age, then all owners share the cost of repairs, not just the top-floor people. If white ants start eating their way up from the ground, then all owners share the cost of repairs, not just the ground floor people.

But the Act is silent (lawyer-speak for “d’oh, we forgot to cover that”) on consequential damages.

Consequential damages is a very slippery slope.

Loss of rent is an obvious and quantifiable consequential damage.

But what if this happened to an owner who was about to depart on a 3-month pre-booked non-refundable round-the-world trip, but they had to stay while sudden urgent common property repairs were effected from inside their unit? Is the OC liable for the cost of their cancelled trip?

What if an owner simply had to stay home from work for one day while the outside of their front door was painted? Is the OC liable for the loss of one day’s pay?

I assert that the OC is never liable for consequential damages.

And my circular argument is: If the OC were liable for consequential damages, then insurers would offer cover for it (another way to make money), but if they don’t offer it, it’s because OCs are not liable.

I don’t think the OC should “come to the party” or “offer” to pay for consequential damages at all. Let the owner take them to court to establish liability.

The biggest problem with this web site is that the initial question usually only presents the favourable half of one side of the dispute, but sound advice can only be given when all the facts are known.

So, let me ask some questions.

Rita C

Are you the landlord of this top unit in a complex of 5 units?

Is this unit the only unit on the top floor?

If not, are the other top-floor owners/tenants moving out for the duration of repairs?

I know the standard lease requires “habitable” premises.

Who declared the unit uninhabitable?

Or did the tenant simply prefer to leave to avoid the inconvenience?

Have you checked yet whether the home warranty insurance actually covers your situation?

Did you understand my previous point that the tenant should not get both free alternative accommodation and relief from rent?

Landlord2

You used the plural in regard to the top-floor.

Are the other top-floor owners/tenants moving out for the duration of repairs?

“Defects” has a specific connotation in relation to strata title matters.

Are your “defects” the result of original construction?

If so, the OC should be pursuing the original builder.

What do you actually mean by “roof defect”?