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For developers 

Strata building bond and inspections scheme 

From 1 January 2018, when a developer enters a contract with a builder for work on a residential (including mixed use) strata scheme of four or more storeys (strata building), they need to lodge a building bond equal to 2% of the contract value of the work. The developer (not the builder) is responsible for lodging the building bond with the Building Bond Secretary before an occupation certificate is issued for any part of a building affected by the work.

A developer may apply for a building bond from an approved Authorised Deposit-taking Institution or a body regulated by the Australian Prudential Regulation Authority (APRA). A list of Authorised Deposit-taking Institutions is available on the APRA website.

The time this takes varies between institutions, so the developer should start the process as early as possible.

If a building bond is not lodged with the Building Bond Secretary before the occupation certificate is issued, penalties apply. The maximum penalty is 200 penalty points.

The building cannot be occupied before an occupation certificate is issued, which may delay settlement of the contract for sale and purchase of land.

Online portal for strata building bond and inspections  

Developers of strata buildings four storeys or over need to register to use the Strata building bond and inspections scheme online portal (the portal) and enter details for each strata project.

Developers can register to use the portal any time after the project starts, and update details and documents as they become available.

The portal will give each strata project a unique identifier number which must be included in the building bond by the issuing institution for verification by the Building Bond Secretary.

The portal is used for all requirements in the Strata building bond and inspections scheme.

You can access the portal by visiting https://reg.force.com/StrataBondDeveloper

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Lodge a strata building bond  

A strata developer must login and upload the following information, documents and payment to the portal before the Building Bond Secretary can consider and approve the bond:

  • a scanned copy of the building bond Instrument
  • a lodgement fee of $1,500
  • complete the following information for the project (the ‘Project’ screen within the portal is the lodgement form and all required fields must be completed), including:
    • the strata plan number
    • the street address of the building
    • the name and address of the principal certifying authority for any building work
    • a mailing address for the developer
    • a mailing address for the owners corporation for the strata scheme\
    • all other fields in the Project screen of the portal
  • upload the following documents for the project:
    • a copy of any documents relevant to determine the contract price used to calculate the bond amount
    • a copy of the building contract or contracts for the relevant work
    • a copy of specifications for the building work, and any variations
    • a copy of any written warranties relating to the building work
    • a copy of any schedule of non-conforming work relating to the building work
    • a copy of all ‘issued for construction’ and ‘as-built’ drawings and specifications relating to the building work
    • a copy of any schedule of approved samples relating to the building work
    • a copy of any development consent or other consents, approvals or certificates issued under the Environmental Planning and Assessment Act 1979 and relating to the building work
    • a copy of any alternative solutions and fire engineering reports, and the applicable assessment and approval by the principal certifying authority, relating to the building work
    • a copy of any design certificates relating to the building work
    • a copy of Building Code of Australia compliance certificates by each subcontractor for any part of the building work carried out by the subcontractor
    • a copy of any inspection report obtained by the developer or builder relating to the building work.

After creating an account on the portal, strata developers can upload and save documents as they become available. They can then submit the lodgement form, required documents, information and payment to the Building Bond Secretary to approve or return if any condition is not satisfied.

After the Building Bond Secretary verifies, receipts the original and approves the building bond, the developer can progress to the next stage.

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Contract price 

The contract price for building work covered by a strata building bond is the total price for all applicable building contracts at the date of issue of the occupation certificate.

Where there is no written contract for the building work, or the parties to the building contract are connected persons, the contract price is determined by a quantity surveyor. For example, there may be no written contract if the developer is also the builder.

A quantity surveyor (who is a member of the Australian Institute of Quantity Surveyors or the Royal Institute of Chartered Surveyors) must not be connected to the developer or the builder.

A cost report prepared by a quantity surveyor must include the costs of the following and be accompanied by a certificate by the quantity surveyor that he or she has inspected the as-built drawings and specifications for the strata plan:

  • construction and fit out costs, not including appliance and prime cost items
  • demolition and site preparation
  • excavation
  • car parking
  • costs for the common property that is included in the property plan, including landscaping, pools, fencing and gates
  • professional fees
  • taxes applied in the calculation of the as-built construction.

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Tribunal orders - contract price and access to a strata scheme  

A developer can apply to the NSW Civil and Administrative Tribunal (the Tribunal), for an order specifying the amount of the contract price (if the contract price was determined by someone other than themselves). The order will specify the amount of the contract price of building work to determine the amount of a building bond.

A developer can also apply to the Tribunal for an order requiring the occupier of a strata scheme lot or any other person to provide access to the lot or any other part of the building for an inspection or to rectify defective building work.

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Appointing a strata building inspector 

A developer needs to appoint a building inspector (the inspector) to complete an interim inspection and produce a report.

The inspector must be appointed within 12 months after the occupation certificate is issued, if the initial period of an owners corporation of a strata scheme is completed within that time.

The initial period is when the owners corporation changes from being the original owner of the land (i.e. the developer) to the actual owners of the lots. The initial period starts when the strata plan is registered with the Registrar-General and ends when one-third of the unit entitlements have been sold. More information on the initial period is available on the Starting the owners corporation page on the Fair Trading website.

The inspector must be a member of a strata inspector panel established by any of the following:

  • Housing Industry Association
  • Master Builders Association of New South Wales
  • Australian Institute of Building
  • Australian Institute of Building Surveyors
  • Australian Institute of Building Consultants
  • Institute of Building Consultants Inc
  • Engineers Australia
  • Australian Institute of Architects
  • Association of Accredited Certifiers

The Strata Inspector Panel Guidelines (Word, 309kb) sets out guidelines for developers to follow when appointing an inspector, and the Strata Inspector Panel Secretary's process (Word, 328kb) sets out the process the Building Bond Secretary will follow when appointing an inspector.

A developer must select a qualified person from the Strata inspector panel, available on the portal.

Once the developer chooses an inspector, they need to add the inspector details to the project in the portal.

The portal will notify the building inspector of the nomination.

The developer must make a disclosure statement about any connection or association with the building inspector in the portal. The proposed building inspector must also make a disclosure.

The portal will email the owners corporation about the proposed building inspector and the disclosures (if any). The developer can only appoint a building inspector if the owners corporation approves the appointment through the portal.

If approved, the developer appoints the building inspector through the portal which will notify the Building Bond Secretary.

If the owners corporation rejects the proposed building inspector, the process can be repeated until either the 12 months expires or the owners corporation approves an inspector. If, for any reason, the developer fails to successfully appoint a building inspector within 12 months, they must notify the Building Bond Secretary through the portal within 21 days after the end of 12 months.

The Building Bond Secretary will then appoint an inspector through the portal and notify the developer as soon as practicable after the appointment is made.

The developer must pay all inspector costs, even when the inspector is not appointed by the developer.

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Strata scheme interim inspection and report 

The strata building inspector must do the interim inspection and upload a report to the portal between 15 and 18 months after the occupation certificate is issued. The portal will then notify the developer and the owners corporation that the report is available to download.

If there is no defective building work identified in the interim report, the developer can apply through the portal to the Building Bond Secretary for a determination that a final inspection/report is not required. In this case, the interim report becomes the final report.

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Review a decision to not require a final report 

A developer, owners corporation, owner of a lot in a strata scheme or the builder can apply to the Building Bond Secretary to review the decision that a final inspection/report is not required.

An application for review must be made within 14 days after notice of the decision has been given. The application must be made through the portal, in writing and signed by the applicant. It must specify the decision to be reviewed and the reasons for the application. Applicants should provide any extra information and the reason why that information was not previously provided, as well as an address (preferably an email address) the Building Bond Secretary can send notification of their review decision to.

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Rectify defective building work  

After the interim report is lodged, any defective building work must be rectified before the final inspection starts.

The builder must give at least 14 days’ written notice to the owners corporation, the developer, the owner and any occupant of any affected lot of their intention to enter any part of the strata lot for an inspection or to rectify the defective building work.

A person must not unreasonably refuse a builder access to any part of the strata scheme if the builder has given proper notice.

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Strata scheme final inspection and report 

Within 18 months after the occupation certificate is issued, the developer must:

  • arrange for the strata inspector who prepared the interim inspection report to do a final inspection and report on the building work. The developer must notify the Building Bond Secretary of the arrangement through the portal within 14 days of making the arrangement.

OR

  • if one of the following circumstances occurs, the Building Bond Secretary will appoint a new building inspector at the developer’s expense:
    • the original building inspector is not available and the developer notifies the Building Bond Secretary through the portal within 14 days after becoming aware that they are not available, or
    • the developer applies through the portal to the Building Bond Secretary to appoint an inspector, or
    • the Building Bond Secretary otherwise becomes aware that the developer has not complied with the requirement to appoint a building inspector for a final inspection.

The Building Bond Secretary will notify the developer and the owners corporation through the portal as soon as practicable after an inspector is appointed.

The building inspector must do the final inspection and upload their report to the portal between 21 and 24 months after the occupation certificate is issued.

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Review a decision to appoint an inspector for a final inspection 

An owners corporation, an owner of a strata scheme lot or the builder who carried out building work in a strata scheme, can apply to the Building Bond Secretary to review the Secretary’s decision not to appoint a building inspector to do a final inspection and report on the building work.

A developer, an owners corporation, and owner of a strata scheme lot or the builder who carried out building work in a strata scheme, can apply to the Building Bond Secretary to review the Secretary’s appointment of a building inspector to carry out a final inspection and provide a final report on the building work.

An application for review must be made within 14 days after notice has been given. The application must be made through the portal or, in writing and signed by the applicant. It must specify the decision to be reviewed and the reasons for the application. Applicants should provide any extra information and the reason why that information was not previously provided, as well as an address (preferably an email address) the Building Bond Secretary can send notification of their review decision to.

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Pay a building bond 

All or part of the building bond may be claimed or realised by the Building Bond Secretary to pay to the owners corporation:

  • to meet the costs to rectify defective building work identified in the final report, if the report identifies the defective building work
  • where both the owners corporation and developer consent and agree to apply to the Building Bond Secretary for payment of the bond.

The cost to rectify identified building work must be agreed by the developer and the owners corporation.

The owners corporation and the developer may apply to the Building Bond Secretary for an agreed amount to rectify identified building work no later than 14 days before the last day that the building bond must be claimed or realised (whichever is later). The final date to claim or realise the strata building bond is:

  • 2 years after the date the building work covered by the bond is completed, or
  • within 60 days after the final report on the building work is submitted to the Building Bond Secretary by the building inspector through the portal (where the Building Bond Secretary appoints the building inspector).

If the owners corporation and the developer do not agree on the amount to be paid, the Building Bond Secretary will nominate a quantity surveyor to decide the amount. The cost of the quantity surveyor must be paid equally by the owners corporation and the developer.

The developer must take any necessary steps to enable the Building Bond Secretary to claim or realise an amount of building bond given by the developer and required to be paid under the Strata building bond and inspection scheme.

If the developer fails to comply with the above, they are subject to a maximum penalty of 10 penalty units.

The Building Bond Secretary may refuse to claim or realise an amount, or reduce the amount otherwise payable, if they are satisfied that the developer or the builder responsible for defective building work was unreasonably refused access to the strata scheme to rectify the work.

The Secretary will notify the owners corporation and the developer of any proposed payment via the portal.

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Review a decision on a building bond claim 

A developer can apply to the Building Bond Secretary to review the decision that all or part of a building bond can be claimed or realised for payment to an owners corporation, developer or other person.

Despite the above, a decision by the Building Bond Secretary to claim or realise a building bond for payment cannot be reviewed if the amount has been paid in accordance with the decision.

An application for review must be made within 14 days after notice is sent from the portal that the bond will be paid. The application must be made through the portal or in writing, signed by the applicant. It must specify the decision to be reviewed and reason for review. The application should provide any extra information and the reason why that information was not previously provided, as well as an address (preferably an email address) the Building Bond Secretary can send notification of their review decision to.

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