The NSW Government is proposing a small set of changes to Part 11 of the Strata Schemes Management Act 2015 (the Act) which introduced the Strata building bond and inspections scheme (the scheme).

Under the scheme, developers are required to lodge a bond of 2% of a building’s contract price with NSW Fair Trading for residential and mixed-use high-rise strata buildings of 4 or more storeys. The bond can be used to pay the costs of rectifying any defective building work identified through an inspection process required by the Act.

The proposed Strata Schemes Management Amendment (Building Defects Scheme) Bill 2018 (the Bill) is now available for public consultation. The proposed amendments seek to enhance the ability of Fair Trading to verify the building contract price (on which the 2% building bond is based), and to clarify the role of the building inspector in the scheme.

The consultation closes on 11 May 2018.

What are the proposed changes? 

The proposed amendments contained in the Bill include:

  • developers must lodge a building bond before applying for the occupation certificate (rather than at any time before an occupation certificate is issued, as is currently required)
  • the owners corporation and the developer must agree on the amount to be released from the bond to meet the costs of fixing identified building defects. If they cannot agree, the Secretary will determine this amount
  • new investigative powers for Fair Trading to enable verification of the amount of the contract price or building bond, including new entry to premises and search warrant powers
  • an increase in the maximum penalty for a developer failing to lodge the building bond from 200 penalty units ($22,000) to 10,000 penalty units ($1.1 million)
  • an offence for developers to provide false or misleading information to the Secretary in relation to the contract price or the building bond
  • a new ‘good faith’ liability protection for building inspectors, and the professional associations that appointed them, which excludes them from liability for anything done (or omitted to be done) in ‘good faith’ in conducting an inspection.

Visit Fair Trading by clicking here for more information