A pipe has been broken by a tenant in a strata property. Who pays?

We recently saw this question about tenants in a strata property posted on the Flat Chat Forum, (a forum for people and managers living and working in strata communities can post questions and have them answered by the community).

Question: Tenants broke a waste pipe which is attached to the garage wall inside the garage. They hit it whilst entering or exiting the garage.  The owner has asked the Owners Corporation to have the pipe repaired. My question is who should pay for repair as the damage is obviously done by the tenant and our owners corporation are getting sick and tired of fixing things that are always broken by tenants?

One response was, “As a building manager of a very large scheme in Sydney the process we follow is that the OC would fix the pipe then invoice the owner of the lot. The owner of the lot could then chase the tenant for the cost of the repair.”

From an insurance perspective, the answer is not so simple…

Answer from Lia de Sousa, GM of Strata Insurance: Generally strata policies cover impact damage. Normally pipes are considered part of the strata building and insurers all apply different policy limits. There are many things to consider such as, what is the excess under the policy and who pays? Can a landlord recover costs from a tenant? What is in the lease agreement and will the bond be sufficient to cover the cost of the damage? Is this a claim under the tenants’ car insurance?  If the Strata lodges a building claim, can the insurers recover the cost of the claim from the tenant?

The other big factor is if there is a claim made under the building policy, will the Strata be penalised on future renewal premiums and increases to excesses? So you can see it is not as straight forward as we all would like trying to determine who is responsible for paying the costs of the damages.

Landlords need to aware that the building forms part of a strata and it is still their responsibility for maintaining and repairing their property.  From my perspective, it is prudent that professional advice is sought to ensure that the strata policy complies with state regulations and adequately protects the interests of the Owners Corporation and property owners.

Thanks Lia, she knows her stuff. See more of what Lia says at Whitbread Insurance Brokers.