Can I claim a Loss or Rent from the Owners Corporation, CHU or SUU?

Posted 22 October 2013

Category: Building Defects, Strata Insurance

Claims against the owners corporation

Up until recently lot owners routinely claimed for any loss of rent suffered by them, due to a breach by the owners corporation of section 62 of the Strata Schemes Management Act 1996 to maintain and repair the common property.

However, a recent decision of the Court of Appeal in Thoo’s case decided that a breach of section 62 did not sound in damages following an analysis of the purpose, wording and scheme of the Act.

However, claims in respect of loss of rent arising in negligence due to negligent repairs and maintenance or the failure to carry out such repairs when it would have been negligent not to carry them out continues unchanged.

Whilst it is tempting to think of all loss of rent claims as being the same, caution should be exercised as they can be quite different since they can be made by different parties, against different persons and rely upon different rights (not to mention differences in the amount of quantum sought).

Claims against the owners corporation’s insurers

For insurance claims made by lot owners and owners corporations, against the owners corporation’s insurance policy much will depend on the terms of the policy and the insurer may be able to exclude cover where the cause of loss of rent was due to:-

• The builder breaching the warranties implied by the Home Building Act 1989; or
• General wear and tear of the common property.

However, loss of rent caused by a sudden accidental event, such as, a burst pipe may be covered, subject to policy terms.

The table which follows illustrates how some CHU and SUU policies may respond:-

***The information contained in this article is general information only and not legal advice. The currency, accuracy and completeness of this article (and its contents) should be checked by obtaining independent legal advice before you take any action or otherwise rely upon its contents in any way.