8 Stages of the Strata Building Bond Inspection Scheme

The Strata Building Bond Inspection Scheme (SBBIS) is relevant to residential or mixed-use strata schemes of 4 storeys or more for building works of contracts that were entered into from 1 January 2018.  A building bond lodged by the developer may be used after 2 years from lodgement to pay for identified rectification works if the developer has failed to rectify these defects.

This guide aims to simplify the SBBIS stages; give clarity on timelines (references are from the date of Occupation Certificate); flag the important aspects such as the OCs need to enable full and proper inspections to be completed within the small window of 3 months. At the time of writing this Guide, no strata scheme has progressed past Stage 3.

Please note that the SBBI Scheme is not relevant to schemes of 3 storeys or less as a remedy is available under Part 6 of the Home Building Act 1989.

STAGE 1 | BUILDING BOND LODGEMENT

• The stage is solely developer responsibility for lodgement of 2% of the contract value.

STAGE 2 | INSPECTOR APPOINTMENT | within 12 months

• The developer is responsible for the appointment of the inspector & the related costs.
• Inspector must be selected from a panel and must be agreed to by the owners corporation.

STAGE 3 | INTERIM INSPECTION & INTERIM REPORT | 15 to 18 months after completion

• The developer must give written notice of at least 14 days of the inspection.
• OC must give reasonable access, or the use of the bond might be in jeopardy.
• The inspection is visual and non-evasive testing. Secondary speciality inspectors can be involved eg HVAC.
• Developer to provide the report to the owners corporationwithin 14 days of receiving it.
• Once the report is received, the owners corporation must let all owners know within 14 days where to access it.

STAGE 4 | RECTIFY DEFECTIVE WORK | 18 to 21 months

• Responsibility of developer to liaise with the builder.
• If there is a need to enter a lot to rectify then must give 14 days’ notice to the owners corporation, developer, lot owner & lot occupier.

STAGE 5 | FINAL INSPECTION & REPORT | 21 to 24 months

• The developer must arrange for the same inspector.
• Inspector cannot raise any matters that were not raised in the 1st report.
• The final report must be in an approved form and provided to the owners corporation within 14 days of completion, no less than 24 months after Occupational Certificate.

STAGE 6 | DETERMINE COST OF RECTIFICATION | after 24 months but before 2 years & 90 days

• Developer & OC to agree to the cost and provide a deed of agreement within 30 days of the finalised report.
• If no agreement, the government will appoint a quantity surveyor to determine the cost of the defective works. The developer & OC to share the cost of the appointed quantity surveyor.

STAGE 7 | PAYING THE BUILDING BOND | 2 years from completion OR 90 days from the final report (later of 2)

• Bond to be claimed OR released between 2 and 3 years after the completion date.
• Unreasonable access refusal to the developer or builder can lead to a refusal of a claim on the bond.
• 7 different circumstances are provided to enable the bond release.

STAGE 8 | COMPLETE THE PROCESS | within 3 years

• Notifications from the OC to the developer are required to comply and penalties exist if these notifications do not happen.

This information is summarised from the NSW government’s comprehensive 48-page owners corporation information manual. This Manual includes key terms, detailed processes, and schedules, including the different written notices to be used in the 8 stages (32 forms).

If you have any questions, simply contact your Strata Plus accredited strata manager