Written by Leisha de Aboitiz, Partner on June 15, 2017
NSW strata owners, developers and managers await news of the proposed new strata building defects laws
It won’t be debated in the legislative assembly until 20 June 2017 at the earliest, which means stakeholders will be left waiting until the last minute to find out whether they will need to comply as at 1 July.
The new regime is primarily set out in part 11 of the Strata Schemes Management Act 2015 (NSW) (‘Defects Regime’), and the bill which contemplates pushing out the commencement date for this regime is the Electronic Transactions Legislation Amendment (Government Transactions) Bill (‘Bill’).
It has already been passed by the state legislative council, but it won’t be debated in the legislative assembly until 20 June 2017 at the earliest.
Despite an approaching and uncertain start date, it will be some time (perhaps years) before strata managers start to see this regime impacting their practices.
It is intended that the Defects Regime will only apply to construction contracts signed, or works that begin, on or after the commencement date of the regime (i.e. on or after 1/7/17 or 1/1/18, depending on whether the Bill is passed).
It follows that a strata manager will not be involved in implementing or monitoring compliance with the new regime until after construction is complete and the new strata scheme is established.
We think it is highly likely that the Bill will be passed before the 30 June deadline and therefore the commencement date will be pushed out to 1 January 2018 – but here’s a quick refresher on how the Defects Regime will work just in case it isn’t delayed.
The law will apply to any building work carried out on strata scheme buildings that are wholly or partly residential (including mixed use buildings), unless they are eligible for home warranty insurance (or would be eligible save for the contract price being below the specified threshold).
Developers will be required to provide a ‘building bond’ (equal to 2% of the contract price of the building work prior to an occupation certificate being issued) to the Secretary of the Department of Finance, Services and Innovation (‘Secretary’).
Developers will be further required to appoint an independent building inspector within 12 months after the completion of the building work. Assuming the appointment is not contested, the inspector must carry out inspections on the building work and provide interim and final reports to the Secretary.
One of the main reasons for the proposed delay to Part 11 is to give Standards Australia enough time to complete the new national standard they have been working on known as AS4349.2 – Group titled properties. The standard will form part of the defect inspection report that is applied by the scheme.
If the report identifies defective building work, the building bond can be used in part or in full by the Secretary to compensate the owners corporation for any cost incurred towards rectification. However, the Secretary may refuse or reduce a claim on the building bond if the developer is unreasonably refused access to the scheme to rectify the work themselves.
The building bond must be returned (in whole or in part) if it is not used for rectification, there is surplus remaining after rectification works are completed, or certain timeframes or other provisions in the legislation apply which trigger its return.
This article is intended to provide commentary and general information. It should not be relied upon as legal advice. Formal legal advice should be sought having regard to any particular facts or circumstances.
Sincere thanks to our wonderful clients and hard-working team for supporting our inclusion in the Legal 500 (Asia Pacific) Guide as a leading firm in Real Estate for 2023
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February 10, 2023
We are delighted that Massons has been selected as an “Excellence Awardee” in the category of “Boutique Firm of the Year” at the 2022 Australasian Law Awards.
Thank you to all of our wonderful clients who have supported our nomination in this category, and to our amazing lawyers and support staff for making this possible!
Wishing all the other Awardees the best of luck and looking forward to the Gala Dinner. A night out with our team is always cause for celebration – win, lose or draw!!
March 23, 2022
We are excited about our inclusion in Doyle’s Guide for 2022 for NSW in the following categories:
Massons – Leading Property & Real Estate Law Firms
Jodie Masson – Leading Property & Real Estate Lawyers and Leading Leasing Lawyers
Leisha de Aboitiz – Leading Property & Real Estate Lawyers and Leading Leasing Lawyers
Ben Malone – Property & Real Estate Law Rising Stars
Thank you to all of our peers and wonderful clients who have helped to achieve this recognition.
March 14, 2022
February 28, 2022
We are excited to announce the appointment of Alex Ho as a Senior Associate at Massons. Alex started with us as a paralegal and has achieved this milestone in record time due to his hard work, his ability to develop and sustain fantastic relationships with clients, his engagement in constantly seeking to improve himself and others in equal measure, and his absolutely infectious enthusiasm. We couldn’t be prouder! Congratulations Alex!
January 5, 2022
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