Waterproofing Defects in Strata: Who Pays in NSW?

When water gets into an apartment, the argument about who fixes it often runs longer than the repair would take. I work as an independent remediation architect on exactly these problems, and the good news is that NSW law answers the "who pays" question more clearly than most committees expect. Here is the actual legal position, in plain English, and every avenue that exists for funding the fix.

The starting point: the owners corporation must repair common property

Section 106 of the Strata Schemes Management Act 2015 puts a strict duty on the owners corporation to "properly maintain and keep in a state of good and serviceable repair" the common property. Strict means what it sounds like: it is not a duty to try hard, and running out of money or goodwill is not a defence. An owners corporation can only vote to opt out of a specific repair where safety and appearance are unaffected, which failed waterproofing almost never satisfies.

So the practical question becomes: is the failed waterproofing common property or lot property?

Where the line sits for waterproofing

The clearest official guidance is the Registrar General's Common Property Memorandum, which many schemes adopt into their by-laws. Its allocation for waterproofing:

• Owners corporation: the original tiles and associated waterproofing on balconies, courtyards and common property floors and walls, "affixed at the time of registration of the strata plan", and membranes in ceilings and roofs.
• Lot owner: tiles and waterproofing "affixed by an owner after the registration of the strata plan", along with fittings like the bath, shower screen and taps.

In short: the building's original membranes are the building's problem; your renovation's membranes are yours. One caution: the memorandum only formally binds schemes that have adopted it, so check your by-laws, though tribunals treat its logic as the sensible default. And regardless of the memorandum, water travelling through the structure (the slab, the external walls, the boundary between lots) is travelling through common property.

If the leak is coming through a balcony specifically, I have written a symptom-led companion guide: my balcony is leaking, what do I do?

If the owners corporation drags its feet

Two pressure points exist, and most owners only know the first.

First, NCAT can order the owners corporation to carry out the repairs. Second, and less known: under section 106(5), a lot owner can recover damages for reasonably foreseeable loss flowing from the breach, lost rent being the classic. Following amendments in 2025, an owner has 6 years from first becoming aware of the loss to bring that claim, up from the old 2 years. The Court of Appeal has also confirmed (McElwaine v The Owners, Strata Plan No 75975 [2017] NSWCA 239) that owners can sue in nuisance or negligence alongside the statutory route.

The deeper question: who pays the owners corporation back?

Fixing the leak and funding the fix are separate battles. If the defect traces back to the original construction, the owners corporation may have claims that shift the cost to the people who built it:

• Statutory warranties. The Home Building Act 1989 warranties run with the building to successors in title, including the owners corporation. Waterproofing is expressly a "major element", so a defect that makes lots unusable can qualify as a major defect with a 6 year warranty period from completion; otherwise the period is 2 years.
• The strata building bond. For class 2 buildings over three storeys completed in roughly the last two to three years, a 2% bond may still be in play: see the 2% defect bond and waterproofing claims.
• The DBP duty of care. Section 37 of the Design and Building Practitioners Act 2020 gives owners corporations a duty-of-care claim for economic loss against builders, designers and developers, reaching back through a rolling window that covers work up to 10 years old. The High Court's Pafburn decision (2024) made it harder for head contractors to shrink their share by pointing at subcontractors. More in the DBP Act and regulated waterproofing designs.
• Building Commission NSW. For serious defects (waterproofing qualifies) in buildings under 10 years old, the Commission can inspect and issue rectification orders. It costs nothing to lodge a complaint.

One honest caution from someone who watches these fights: legal recourse is slow, uncertain and expensive, and I have seen owners corporations spend the cost of the repair on lawyers and still have a wet building. Pursue the claims where they are strong, but never let them delay diagnosing and designing the fix. A building that is documented, investigated and properly repaired argues better in every forum anyway.

Why the diagnosis matters more than the argument

Most "who pays" fights stall because nobody actually knows what failed. Water enters in one place, travels through another and appears in a third, so the committee argues about the symptom while the cause keeps working. This is why waterproofing consistently tops the NSW Government's own strata defect surveys as the most common serious defect. An independent investigation answers the legal question (original construction or renovation? common property or lot?) and the technical one (what is the repair?) at the same time.

That independence is the whole point of how I work: I diagnose and design the repair, then specialist remediation builders price and build it against my design, so nobody is marking their own homework. The full method is on the waterproofing remediation service page, and how it differs from collecting builder quotes is covered in remedial consultant versus builder quote.

If your building is arguing about a leak right now, a Class 2 waterproofing consultation is a fixed $660 and includes a diagnostic site visit. It is usually the fastest way to turn a circular committee argument into a plan.