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Owners Corporation Law - September 2018

30 Aug 2018

OCs will be forced to fix the dodgy cladding

The Minister for Planning Richard Wynne, announced late last month new reforms to reduce the cost of removing dangerous combustible cladding from buildings, noted as “the first of their kind anywhere in the world”.

The reforms include amendments to the Local Government Act that will create what is called cladding rectification agreements (CRAs).

The CRAs will be between owners’ corporations (OCs) and local councils – providing long-term, low-interest loans to pay for building work to rectify cladding.

Effectively, owners would be charged via their rates over a minimum period of 10 years, with costs transferred with the property if owners sell.

This arrangement was a key recommendation of the Victorian Cladding Taskforce (VCT) established last year and chaired by former premier Ted Baillieu.

What stinks to high heaven about all this? Well, for starters, it’s because the VCT was made up of stakeholders comprising architects, building material suppliers, real estate agents, builders, developers, engineers and building surveyors.

Absent from the taskforce stakeholders’ table was the one group that perhaps needed to be represented the strongest – the poor old owners of the affected buildings themselves, Mr and Mrs Joe Public.

The closed recommendations of the VCT were always going to be skewed towards an outcome that recommended no fault to the actual wrongdoers who were responsible for installing the combustible cladding in the first place.

Because the VCT and the government have not put in place any stronger consumer law protection reforms to widen the ability of owners to sue wrongdoers, the OCs themselves are now left to pay to fix the problems with their buildings.

Over 100 building orders have been sent by the Victorian Building Authority to date, while it finalises its audit of all buildings in Melbourne.

A number of other significant recommendations came out of the interim report, including a proposed statutory duty of care on building practitioners, including architects and designers, in the residential strata sector. However, to date, none of this has been implemented.

The Victorian Cladding Taskforce (VCT) released its interim report into highly-combustible aluminum composite panels (ACP) and expanded polystyrene (EPS) on December 1, 2017. The products, which have been widely used since the 1990s, have been implicated in a number of blazes including the fires at Docklands’ Lacrosse building, and London’s Grenfell tower that claimed the lives of 71 people.

The interim report made a number of key findings and recommendations to government, chief among them being the ban of ACP and EPS cladding on buildings of two or more storeys that are residential, health-care, assembly or aged care buildings, and buildings of three or more storeys that are office, shop or storage buildings.

A number of other significant recommendations came out of the interim report, including a proposed statutory duty of care on building practitioners, including architects and designers in the residential strata sector.

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