Changes to the Strata Schemes Management Act 2015.
Reforms to the Strata Schemes Management Act 2015 are an attempt to protect buyers of new strata lots from defective building works by facilitating the early identification and rectification of defects, thus leading to an improvement in the standard of construction of NSW residential strata.
Will reform fix the NSW defective building works epidemic?
The commencement of the Strata Schemes Management Act 2015 reforms was delayed until 1 January 2018. But will this new regime be the magic bullet to fix to the defective work epidemic in NSW strata?
The Scheme attempts to ‘insure’ the risk of defective building work in residential strata properties over three stories by requiring developers to lodge a defects bond and to appoint building inspectors to carry out interim and final inspection reports. These properties fall outside the Home Building Compensation Fund Scheme.
One result is that, when defects became apparent and if the developer or builder was insolvent, Owners Corporations and lot owners, were left with no recourse (high but often not dry).
The lodgement of a 2% bond, by the developer is a condition precedent to the issue of an occupation certificate. A developer is also obliged to appoint an inspector to carry out interim and final inspections – and produce reports – over a two year time frame.
Critics of the building defects bond scheme
Critics of the Scheme say that the bond is just not enough and developers may just price defects, and the bond, into budgets.
The Scheme seems to impose unenviable obligations upon inspectors as they cannot be “connected” to the developer and must act impartially (despite being paid by the developer). It seems that conflicts will inevitably arise leading to further disputes.
However, absent an extended time period for statutory warranty claims or perhaps the imposition of personal liability on directors of developer companies, the Scheme will just have to do.
Clare Peacock, Principal solicitor at Northern Beaches Construction Lawyers, provides practical advice on the many issues that can and do arise from residential living, building works, construction contracts, and strata living. These regulations are a complex web of statutes, by-laws, regulations, case law and know-how, and involving a number of parties and their obligations. It is important, when these issues arise, to involve a lawyer who is familiar with the specific area of law. This is where Clare can help.
Clare Peacock
Principal Solicitor
Northern Beaches Construction Lawyers