The Strata building bond and inspections scheme (The Scheme) commenced on 1 January 2018
It applies to building work for building contracts entered into from 1 January 2018, or if there is no contract, it applies to building work commenced from this date.
Developers are required to lodge a building bond that is 2% of the contract price for the building work, with NSW Fair Trading (the Secretary). The building bond secures funds (up to the amount of the bond) to pay for the costs of rectifying defective building work.
Building work means, building work that is carried out on a residential or partly residential (mixed-use) strata building, that is four or more storeys. The building work must also be carried out for the purposes of, or contemporaneously with, the registration of a strata plan or a strata plan of subdivision of a development lot.
Mixed use purpose could be, for example, a development that includes a combination of residential, retail, commercial, hotel, but it must include residential.
The Scheme does not apply to building work if the work is subject to the requirements to obtain insurance under Part 6 of the Home Building Act 1989 (Home building compensation cover). For example, the building is three storeys or less.
Summary of the key requirements for strata inspector panels
The following is a summary of the key requirements for the strata inspector panels (SIP). More detail is explained below.
- the authorised professional association must develop a competent SIP, and
- maintain their SIP on their website.
For more information about the key terms, please refer to the Key Terms section on the Strata building bond and inspections scheme page.
How will the Scheme be administered?
The Strata building bond and inspections scheme is administered by an online portal (the portal), and is used for stage one of the Scheme – Building bond lodgement.
The developer must provide details of the project relating to the strata scheme in the portal. This includes uploading the mandatory documents, as required under legislation. These are the documents that are required to be provided by the developer to the building inspector.
The Strata building bond and inspections scheme is administered by electronic communications. All correspondence required for the Scheme will be via email.
For the building inspector, their email address will be collected by the developer or the Secretary when they are proposed as the building inspector to the owners corporation.
Written notices suite
For stages 2 to 8 of the Scheme, the Secretary will provide a package of all written notices required under legislation to key participants when they are required to come into the scheme.
Written notices are not required by a SIP.
Strata building bond and inspections scheme process
The following is a general overview of what is required within each stage of the Strata building bond and inspections scheme.
Strata inspector panel guide to comply with legislative requirements.
Important: The guideline below has been simplified and for full obligations and mandatory requirements, reference should be made to legislation and Secretary’s guidelines.
1. Building bond lodgement
Stage one does not directly affect the strata inspector panel. For further details, refer to the Strata building bond and inspections scheme page.
2. Inspector appointment
A developer is required to appoint a building inspector to complete the interim and final inspections and the interim and final reports.
A building inspector can be proposed and appointed to carry out inspections and produce reports for the Strata building bond and inspections scheme, if they are a member of a strata inspector panel.
Strata inspector panels
The building inspector must be a member of a strata inspector panel (SIP).
A strata inspector panel can only be provided by an authorised professional association, as listed in clause 45 of the Strata Schemes Management Regulation 2016. A strata inspector panel (SIP) may be established by any of the following:
(a) the Housing Industry Association
(b) the Master Builders Association of New South Wales
(c) the Australian Institute of Building
(d) the Australian Institute of Building Surveyors
(e) the Australian Institute of Building Consultants
(f) the Institute of Building Consultants Inc
(g) Engineers Australia
(h) the Australian Institute of Architects
(i) the Association of Accredited Certifiers.
To access the webpages of the authorised professional associations above, please refer to the Strata inspectors panels on the Strata building bond and inspections scheme page.
A person who wants to be included on a strata inspector panel (SIP), should make enquiries with their membership body, if they are listed above, or contact one of the above authorised professional associations.
Each association will have their own processes and criteria to determine if a person is competent and qualified to perform building inspections and produce reports for the purposes of the Scheme. This may depend upon the varying qualifications, skills and experience of its members, including different levels of membership.
That professional association will determine if the qualified person will be included on their SIP.
Inclusion on a SIP means that an authorised professional association has determined the qualified person is competent to perform building inspections and produce reports for this Scheme.
Each SIP will have a register of members who are qualified to be building inspectors for the purposes of the Scheme. This register must be freely available on each association’s website and must contain the details and experience of each building inspector, including their contact details.
The Secretary has published a guideline regarding the appointment of building inspectors by developers and owners corporations (DOCX, 306.07 KB).
If a building inspector is not appointed by the developer and owners corporation, the Secretary has published the process the Secretary will follow to arrange the appointment of building inspectors (DOCX, 328.1 KB).
The authorised professional associations must satisfy the terms and conditions within the guideline documents regarding strata inspector panels. It is the authorised professional association’s responsibility to keep current their contact details and their own strata inspector panel registers, including up to date member details. The SIP registers must be freely available online and be easily accessible on the individual association’s webpage.
3. Interim inspection and report
4. Rectify defective building work
5. Final inspection
Stage five does not directly affect the strata inspector panels. If, however the building inspector who performed the interim inspection is not available for the final inspection, please refer to the Secretary’s process (DOCX, 328.1 KB).
For further details, refer to the Strata building bond and inspections scheme page.
6. Determining the cost to rectify defective building work
Stage six does not directly affect the strata inspector panels. For further details, refer to the Strata building bond and inspections scheme page.
7. Paying the building bond
Stage seven does not directly affect the strata inspector panels. For further details, refer to the Strata building bond and inspections scheme page.
8. Completing the process
The process should complete not more than 3 years after the date of issue of any occupation certificate (OC) which allows people to occupy the building – whether conditional or interim OC for the building to which it applies.
Variation of time requests
The developer, owners corporation or building inspector, may have made application to the Secretary to vary the times for reports and other matters. This may result in the length of the Scheme being extended.
Certain decisions of the Secretary are reviewable decisions. This may result in the length of the Scheme being extended. Reviewable decisions are included under key terms.
Tribunal orders (NCAT)
A developer, the Secretary or the owners corporation can apply to the NSW Civil and Administrative Tribunal for an order specifying the contract price for building work to determine the amount to be secured by a building bond. This may result in the amount of the building bond, provided by the developer, being varied.
During any stage or at the completion of the process, the contact person for each participant in the Scheme may provide feedback by email to firstname.lastname@example.org.
Closing the process
Once the administration of the Scheme is complete, the information and documents relating the building bond will be stored in accordance with NSW Government record keeping policy.