Implications for developers
In order to avoid fines and delays in receiving an occupation certificate, developers must comply with their new obligations under the scheme and ensure that any contracts in negotiation and signed after 1 January 2018 reflect the new requirements.
- Building bond: Developers are now required to lodge a building bond equivalent to 2% of the building contract price with NSW Fair Trading.
- Appointment of a building inspector: Developers must source and appoint an independent building inspector from the strata inspector panel, with the approval of the owners corporation.
- Interim inspection: Between 15 and 18 months after the building work has been completed, the inspector will conduct a first inspection of the strata property and prepare an interim report identifying any defective building work.
- Defects rectification: If no defects are identified, the building bond may be released to the developer two years after the date of completion. If defects are identified, they must be rectified by the developer.
- Final inspection: Between 21 and 24 months after the building work has been completed, the inspector will conduct a final inspection of the strata property and prepare a final report.
- Payment of building bond: If no defects are identified, the building bond may be released in full to the developer. If defects remain, the building bond may then be used to pay the costs of rectification.
For more information or advice in relation to these legislative changes contact the partners listed below.