Fire cladding audit - Real estate industry bulletin 218

18 March 2020

Fire events in Australia and around the world involving the use of certain types of external wall cladding highlight the need for real estate agents, business agents, sales representatives and property managers to be aware of their obligations in relation to disclosures, as the presence or use of combustible cladding that does not comply with the Building Code of Australia has been found to contribute to rapid fire spread across the façade of the building.    

In Western Australia, the Department of Energy, Mines, Industry Regulation and Safety (DMIRS) – Building and Energy Division (Building and Energy) recently completed a state-wide cladding audit of high risk buildings with combustible cladding. The audit resulted in 52 buildings with combustible cladding being referred to the relevant local government permit authority for enforcement action including the issuing of building orders.  Building and Energy understands that each building owner that has been issued a building order under the Building Act 2011 is required to engage a fire engineer and remediate the combustible cladding. 

When issuing the building order local governments notified all occupants of affected buildings in writing about the potential dangers of combustible cladding. However, Building and Energy understands that since the notification was issued by local governments some new tenants who have recently entered into tenancy agreements have not been made aware of the existence of combustible cladding on the building being tenanted.

Agents and sales representatives are reminded of their obligations under the Real Estate and Business Agents and Sales Representatives Code of Conduct 2016 (the Code).  The Code requires agents, sales representatives and property managers to disclose “material facts” prior to the execution by a client of any contract relating to the sale or lease of any real estate or business. DMIRS - Consumer Protection Division’s (Consumer Protection) view is that the existence of combustible cladding on a building would be considered a material fact and should be disclosed to prospective purchasers and tenants. The disclosure should also include the risks associated with the cladding and any remediation requirements that have been ordered by the local government.  The Code also requires that any agent or representative must make all reasonable efforts to ascertain or verify all facts material to the transaction.

Consumer Protection understands that local governments have required the Council of Owners of a strata complex to formally notify the local government about any interim control measures recommended by fire engineers and to confirm that these measures have been implemented while options for remediation are being considered.  Such measures include ensuring occupiers of the building are fully informed about the risks and measures to manage them.