NSW strata building bond and inspections scheme process

NSW strata building bond and inspections scheme process
NSW strata building bond and inspections scheme process

The strata building bond and inspections scheme applies where a developer and builder enter into a contract from 1 January 2018 in NSW.

The scheme applies to building work to construct residential or partially-residential strata properties that are four or more storeys. Buildings that are three storeys or under are covered under the Home Building Compensation Fund.

This scheme includes a building bond and mandatory defect inspection reports. It provides a structured, proactive process that resolves building issues quickly and cost effectively.

Developers must lodge a building bond with NSW Fair Trading equal to two percent of the contract price for residential and mixed-use high rise strata buildings.

The building bond secures funds (up to the amount of the bond). The building bond can then be used to pay the costs of rectifying any defective building work identified in a final inspection report.

Stages in the process:

1. Preparing to lodge the building bond - The developer should prepare to lodge the building bond once they and the builder have entered in to a contract. The bond is equal to two percent of the contract value of work.

2. Bond lodgement - The lodgement is uploaded online through a form, with bond payment and supporting documents and information.

3. Appointing a building inspector - The developer sources a building inspector through the Strata inspector panel. The building inspector must be independent of the developer.

4. Interim inspection and report - The building inspector conducts their first inspection of the strata property and completes a report identifying any defective building work. This happens between 15 and 18 months after the building work has been completed.

5. Final inspection and report - The building inspector arranges with the owners corporation to conduct a final inspection of the property. This happens between 21 and 24 months after the building work has been completed.

6. Payment of bond - If there are no defects, the bond is released in full to the developer.

7. Completing the process - The Building Bond Secretary facilitates the release of the bond money. The owners corporation must use any money they receive to fix the defects identified. After the defects are fixed, any money left over must be returned to the developer.

Developers, building inspectors, builders, the owners corporation and a strata inspection panel will all be included in the process.

To read more about the building bond and inspections scheme click here.

 

Tags: 
NSW Strata Law

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