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Tenant Compensation because of Builder [VIC]

Discussion in 'Property Law Forum' started by Johan, 18 July 2014.

  1. Johan

    Johan Member

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    We've been struggling for just over a year to get the builder (who has engaged over the past year - and is trying to resolve the property defect) to resolve the building defect in a timely manner.
    There is a water leak from the top floor of our unit to the lounge (ground floor). The tenant is now claiming that they have lost furniture and damaged loose carpet due to the rains and for their inconvenience due to the leak.

    We've tried our insurance to assist with this claim (lump sum claim) that the tenant is claiming from us as landlords without any luck. They say the tenant should have their contents insurance. They are unfortunately refugees (which the property manager 'sold to us' as a 'guaranteed rental income' as it is paid by Centrelink) and does not have contents insurance.

    They are now also beyond their initial 12 month contract and wants to stay on, but with reduced rent of $90 /week. They declined our earlier offer we made.
    In their original contract they signed for the initial 12 months, we've had a clause added to it to advise them that there is a building defect and that the builder is trying to resolve the problem.

    Questions: Are they in a position to claim the compensation and reduction in rent?
    Question: Is the best to let them take us to VCAT or us them to VCAT so that the court decide this?
    Question: Anyone out there experienced similar situation?
    Question: Help! What are we to do?
     
  2. Sarah J

    Sarah J Well-Known Member

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    Hi Johan,

    Can you answer the following questions:

    - Is this a house or a multi-storey building managed by an Owners Corporation?
    - Why have you been waiting on the one builder and not attempted to engage other builders to fix the problem?
    - Is the property located in Victoria?

    In tenancy agreements, there is a duty on the landlord to:

    - Keep the property in good repair (Residential Tenancies Act 1997 (Vic) "RTA" s 68).
    - Ensure that the tenant has quiet enjoyment of the property (RTA s 67). This means that the tenant is entitled to undisturbed occupation without interference from things within the landlord's control.

    A breach of these duties might warrant compensation to the tenant. This compensation may take into account any damaged property of the tenant.

    Due to the delay, and perhaps even the nature of the damage itself, this may be classified as an urgent repair. This means that you are expected to repair the damage in the roof as soon as possible, or within reasonable time. One year is too long.

    In relation to your insurance not covering the damage to the tenant's property. You may bring this up with the Financial Ombudsman Services. They may be able to assist you and resolve disputes between consumers and financial institutions, including in relation to insurance coverage.
     
  3. Johan

    Johan Member

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    RESPONSE IN BOLD.
     
  4. Sarah J

    Sarah J Well-Known Member

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    Hi Johan,

    I understand this is a difficult position to be in. You're dealing with two separate issues here. First, in relation to your duties and liabilities towards your tenant. Second, your contractual obligations and rights with the building.

    In relation to your tenant:

    Your obligation to repair, along with your other duties under the RTA, are not dependent on your contractual agreements with the builder or Body Corporate (now known as "Owners Corporation" in Victoria). The tenant is able to undertake repairs themselves and then later seek the costs from you, as the landlord (RTA s 72). Your obligations towards the tenant remains unaffected notwithstanding any other contactual agreements and warranties you may have with the builder or Body Corporate. These contractual agreements should not override or render ineffective any terms in the RTA.

    In relation to issues with your builder:

    Do you have a copy of the contractual agreement with the builder and/or warranty terms and conditions? It is best to have primary knowledge of these terms and conditions rather than relying on what the Body Corporate or your property manager says. Request it if you do not already have access to these contracts. Have a read through the agreement(s) and you should find a section relating to building repairs and delays.

    If the damage is in a common area, you (and not your tenant) may ask the Body Corporate to make repairs. They have a reasonable time frame, generally 28 days, to action this request. If not, you can either: make a complaint to Victorian Affairs Victoria and request conciliation towards a resolution, or make an application to the Victorian Civil and Administrative Tribunal for an order to repair.

    If the damage is in your area and you have a contractual right to seek repair by the builder, you can complain to Consumer Affairs Victoria against your builder: Building Disputes, Defects and Delays. If you can, find out why there has been such a long period of delay in repairing your building. Subsequently, you may be able to make an application to the Victorian Civil and Administrative Tribunal for an order to repair against the builder. Furthermore, you may be able to seek compensation for any damage you have incurred due to any unreasonable delay by the builder (including compensation paid to the tenant). This will depend on what is contained in your contract with the builder.
     

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