Should purchasers think twice before acquiring strata leasehold?

In the NSW Court of Appeal case of The Owners – Strata Plan No 91322 v Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2019] NSWCA 89 the Court decided the owners corporation and lot owners, holding title under a 99-year lease in a strata leasehold scheme, were not entitled to the statutory warranties relating to residential building work in section 18B of the Home Building Act 1989 (NSW).

The Court held that since the owners corporation had acquired only a leasehold interest from the holder of the freehold interest in the common property, it was not an “immediate successor in title” or “successor in title” for the purposes of sections 18C and 18D of the Home Building Act 1989 (NSW) respectively.

The leasehold scheme in question was created under the (now repealed) Strata Schemes (Leasehold Development) Act 1986 (NSW) in an environment when strata schemes were governed by two statutes which distinguished between freehold and leasehold title.

The Court did not comment as to whether an owners corporation (or lot owners) who held leasehold title in a strata scheme created under the (now in force) Strata Schemes Development Act 2015 (NSW) could be considered “immediate successor[s] in title” or “successor[s] in title” for the purpose of the Home Building Act 1989 (NSW). Consequently, it is not settled as to whether owners corporations or lot owners in a leasehold strata scheme created after the commencement of the 2015 Act would have the right to enforce the warranties in section 18B of the Home Building Act 1989 (NSW) against a builder.