The updates made to NSW Legislation apply to constructed residential or partially residential strata properties that are four or more storeys high, with an aim to address relevant building defects in these new strata properties. Under the revised scheme, developers must lodge a bond which is equal to two per cent of the contract price for their new multi-storey strata property. A building inspector would then be engaged to inspect the building to identify any defects that require rectification. The bond monies can be used to pay the costs for the rectification of those identified defects. The changes to the scheme enhance the ability to verify the contract price (on which the two per cent bond is based) and clarify the role of the building inspector. The changes to the Strata Schemes Management Amendment (Building Defects Scheme) Act 2018 (the Amendment Act) that apply from the 1st of July 2020:

• Developers in NSW must lodge the building bond before an application is made for an occupation certificate. Previously, it was only lodged before the occupation certificate was issued.
• Developers must provide adequate documentation to the building inspectors to assist with their inspection and review.
• There is a set percentage on the amount a developer must release as a building bond for defective repairs.
• A debt recovery mechanism will enable the recovery of unpaid or insufficient bonds from a developer.
• The Secretary has new investigation and enforcement powers for the purposes of the Building Defects Scheme.
• ‘Good faith’ immunity from liability is available to protect professional associations, building inspectors and people acting under the inspector’s direction.

The changes to the Strata Schemes Management Amendment (Building Defects Scheme) Regulation 2020 (the Amendment Regulation) that apply from the 1st of July 2020:

• Clarification that to be appointed to a panel of inspectors, a person must be a natural person and not a corporation.
• Professional associations are now required to keep and maintain a public register containing details of members of their strata inspector panel.
• Guidelines for professional associations that place conditions on the conduct of building inspectors.
• ‘Contract  price’ is clarified to include applicable contracts whether ‘paid or payable’ as at the date of issue of the occupation certificate, to include unpaid accounts in the calculation.
• Penalty notice offence provisions are included for a range of offences under the Strata Schemes Management Act 2015 and the Strata Schemes Management Regulation 2016.