Strata living works smoothly most of the time. But when problems arise — and they will — knowing your options and the correct escalation path can save you thousands of dollars and months of frustration.
This is Part 5 of our Beginner's Guide to Strata. Here we cover the issues that actually come up in strata buildings and how they get resolved.
Building Defects and Remediation
Building defects are one of the most financially significant issues in strata. They range from minor cosmetic problems to serious structural failures that can cost millions to fix.
Common defect types:
- Waterproofing failures — the most common defect in NSW apartments. Water penetration through balconies, roofs, bathrooms, and basement car parks. Often caused by poor construction or deterioration over time.
- Cladding issues — combustible cladding (like that in the Star Casino case) became a major concern after the Grenfell Tower fire. NSW has a cladding register, and buildings with non-compliant cladding may face remediation orders.
- Structural cracking — hairline cracks are normal. Cracks wider than 2mm, or cracks that are growing, can indicate structural movement and need investigation. Understanding defect severity levels.
- Fire safety deficiencies — non-compliant fire doors, missing smoke detectors, blocked exits, or outdated sprinkler systems. Fire & Rescue NSW can issue orders requiring immediate remediation.
- Concrete spalling — common in older buildings near the coast, where salt air causes the steel reinforcement inside concrete to corrode and expand, cracking the concrete from within.
Who pays? It depends on when the defect originated:
- Builder defects (within warranty) — NSW has a 6-year warranty period for major defects and 2 years for minor defects from the date of completion. The developer/builder is liable, but enforcing this often requires legal action.
- Defects outside warranty — the owners corporation bears the cost, funded through the capital works fund or special levies.
Major defect remediation is one of the leading causes of strata disputes in NSW. Buildings can spend years in litigation trying to recover costs from developers, especially for defects discovered after the warranty period.
By-law Breaches
By-laws are the rules that govern life in a strata building. Every scheme has a set of registered by-laws, and they cover everything from noise and pets to renovations and parking.
Common by-law issues:
- Noise — the single most common strata complaint. Most by-laws restrict noise during certain hours. Persistent noise issues can escalate from committee warnings to NCAT orders and fines.
- Pets — NSW law now prevents blanket pet bans (since 2021), but buildings can still have reasonable restrictions. Owners must get prior approval, and approval can only be refused on reasonable grounds (like the pet being a genuine nuisance or danger).
- Renovations — any work affecting common property (even replacing a front door) requires owners corporation approval. Cosmetic work within your lot (painting, replacing carpet) generally only needs written notice. Structural work always needs formal approval via a by-law or special resolution.
- Short-term letting (Airbnb) — NSW strata law allows buildings to restrict short-term letting to 180 days per year (or less via a by-law). Check the building's by-laws if you plan to let your apartment on platforms like Airbnb.
- Parking and storage — disputes over car spaces, especially in buildings where parking is allocated by by-law rather than on title. By-law parking can be reallocated by the owners corporation — on-title parking cannot.
The enforcement path for by-law breaches is: informal discussion → written notice from the committee or strata manager → formal breach notice → application to NCAT if the breach continues. NCAT can impose fines of up to $5,500 per breach ($11,000 for animal nuisance).
Insurance: What's Covered, What's Not
The owners corporation is legally required to insure the building. There are three main types of strata insurance:
Building insurance (mandatory) — covers damage to the building structure and common property for its full replacement value. This includes fire, storm, water damage, and other insured events.
Public liability (mandatory, minimum $10 million in NSW) — covers the owners corporation if someone is injured on common property (e.g., a visitor slips in the lobby).
Voluntary workers insurance (mandatory) — covers committee members and volunteers who help with building maintenance.
What's typically NOT covered by strata insurance:
- Your personal contents and belongings (you need your own contents insurance)
- Improvements and fixtures you've installed inside your lot
- Gradual deterioration (wear and tear isn't an insured event)
- Known defects that the building hasn't addressed
- Some natural disasters depending on the policy (check flood and earthquake cover)
Underinsurance is a real problem in NSW. If the building is insured for less than its full replacement cost and a major event occurs, every owner pays the shortfall proportionally. Check that the sum insured is realistic — some older buildings haven't updated their valuations in years.
Rising premiums are another concern. Insurance premiums for strata buildings have increased significantly in recent years, especially for buildings with claims history, cladding issues, or flood exposure. Sharp premium increases are a warning sign worth investigating.
Common Disputes and How They Escalate
Our analysis of 2,000 strata disputes found that the most common categories are:
- Renovations and alterations — owners doing work without approval, or disputes about what constitutes "cosmetic" vs "structural" work.
- Common property maintenance — the owners corporation failing to repair or maintain common property, causing damage to individual lots.
- By-law compliance — noise, pets, parking, and other lifestyle disputes.
- Building defects — disputes between the owners corporation and developers/builders over defect rectification.
- Financial disputes — disagreements about levy amounts, special levies, or how funds are being spent.
Most disputes follow a predictable escalation path: informal resolution → mediation → tribunal (NCAT) → courts. The vast majority can and should be resolved before reaching the tribunal. But some buildings develop a pattern — 36% of buildings that go to tribunal come back for more.
Fair Trading and NCAT: When and How to Escalate
When informal resolution fails, NSW has two main avenues:
NSW Fair Trading offers free mediation for strata disputes. This is almost always the first formal step, and it's free. A mediator helps both parties reach a voluntary agreement. Many disputes are resolved at this stage. You can apply online through the Fair Trading website.
NCAT (NSW Civil and Administrative Tribunal) is the tribunal that hears strata disputes when mediation fails. NCAT can:
- Order the owners corporation to carry out repairs
- Order an owner to comply with by-laws
- Impose fines for by-law breaches
- Appoint a strata manager if the scheme is dysfunctional
- Resolve disputes about levies, voting, and meetings
- Order compensation for damage caused by common property failures
NCAT filing fees range from about $50 to $500 depending on the type of application. It's designed to be accessible without lawyers, though many parties do use legal representation for complex matters.
Important: For most strata disputes, you must attempt Fair Trading mediation before applying to NCAT (there are exceptions for urgent matters). Keep records of all correspondence and attempts at resolution — you'll need them.
For very large claims (over $500,000) or complex legal questions, disputes may go to the Supreme Court instead of NCAT. This is expensive and should be a last resort — litigation costs can exceed $100,000+ and take years. Excessive litigation rarely ends well.
Next in the Series
In Part 6: Making Strata Work for You, we wrap up with practical advice on getting the most out of strata living — from joining the committee to knowing your rights and finding useful resources.