The value of property in Australian capital cities, especially in Sydney and Melbourne, is changing the economics of recycling existing buildings.

Relatively young low-rise buildings, and even mid-rise buildings, are making way for a new generation of buildings, including residential apartment buildings of 60, 70 and even 80 storeys.

Now, if I am an owner of a building asset adjacent to one of these developments, should I worry? Will the construction works affect my asset beyond the obvious inconvenience during construction?

The answer to this was recently made absolutely clear in a Melbourne suburb.

The same issue arises for property owners adjacent to major infrastructure works such as services upgrades and major rail and road projects.

The Building Code of Australia provides protection to adjoining owners in the following way:

  • The developer of a project is required to seek advice from the relevant building surveyor as to whether works to project the adjoining property (protection works) are required
  • If deemed to be required, these protection works must be provided before and during the construction work
  • The developer is required to serve notice on the adjoining owner and provide details of any proposed protection works
  • The adjoining owner is required to review the proposed protection works and advise agreement or otherwise within 14 days

These protection works documents invariably involve structural drawings of temporary works, such as ground retention works for basement construction or temporary propping to existing above ground structures. An independent structural engineer is usually engaged by the adjoining owner to provide independent technical advice. This advice can include a recommendation that the proposed works are considered acceptable, or a recommendation for further and better particulars of the protection works.

However, the acceptance of the protection works is just the start of the journey for the adjoining owner.

What happens when they start discovering things like cracking that ‘wasn’t there six months ago,’ movement of various elements relative to each other on their side of the property boundary, or water ingress into habitable spaces?

The importance of a due diligence dilapidation survey cannot be over-emphasised. This survey is a key document that creates the datum against which all claims of damage due to construction works can be assessed.

A comprehensive due diligence dilapidation survey is a very detailed record of existing conditions prior to the commencement of construction works on the nearby site. It can record various components and systems in a building. The survey usually involves a photographic record along with relevant notes of existing defects such as cracking, distortion, settlement, movement, concrete spalling, joint movement, water seepage and other potential defects.

Importantly, it should also record where no defects are present. A fair, comprehensive dilapidation report removes the key obstacle to dispute resolution around this issue, namely ‘was the defect there before the adjoining works began?’

So, if you are the owner of a building near a new development, what should you do?

Firstly, know your rights. The site will have a building surveyor authorised to assess building plans with a view to ensuring they comply with the Building Act 1993, the Building Regulations 2006 and the Building Code of Australia. His/her formal title is the relevant building surveyor (RBS). You should have received formal notification from them that works are about to commence.

Secondly, understand that your adjoining neighbor is required, where determined by the RBS, to notify you of works to be carried out and request your consent. This request will usually include documentation in the form of drawings.

Get a professional to carry out an independent review of the drawings. This is usually a structural engineer who can assess the potential for damage to your structure due to the works, and just as importantly, the proposed method of carrying out the works.

Finally, arrange to have a dilapidation survey carried out on your property before works commence. You will need at least two copies of this document. They should be dated and a copy sent to the entity responsible for the works on the adjoining property, usually the head contractor. Formal acknowledgement of receipt should be obtained to ensure that everyone is in agreement of the starting point on this journey.

We have found in the past that all parties involved in adjoining owner issues respond professionally and appropriately when there is adequate documentation that is accepted by all up front.

This will not guarantee a hassle-free experience as an adjoining owner, but it will go a long way toward avoiding the angst of arguing about who should pay for consequential damage that occurs to existing building during adjoining works.