Defects Bond to commence on 1 January 2018
The long awaited commencement of the new Strata Building Bond Scheme which was to start on 1 July 2017 will now commence on 1 January 2018.
The Scheme will only apply to contracts signed (or where there is no contract and building work commences) from 1 January 2018.
According to NSW Fair Trading the commencement date was delayed so that all procedural and professional requirements supporting the scheme are in place before commencement.
Under the Scheme, once a strata building is completed, developers will be required to lodge a bond with the Department of Fair Trading equal to 2 per cent of the contract provide for residential and mixed use high rise buildings.
The purpose of the bond is to secure monies that can be used to rectify defective building work identified in a final inspection report.
Where defects are noted as part of the inspection process, Fair Trading will transfer funds from the building bond to the owners’ corporation for the value of the rectification work.
For more information how the scheme works refer to NSW Fair Trading Building Bond Information page and our previous publication “Implications for Developers in the Amended Strata Schemes Management Bill 2015”
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