Defects bond scheme – expected deferred start date of 1 January 2018
WHO SHOULD READ THIS
- Anyone involved in residential building works in New South Wales.
THINGS YOU NEED TO KNOW
- Although not official yet, the new defects bond scheme under the Strata Management Scheme Act 2015 (NSW) may now commence 1 January 2018.
Under the Strata Schemes Management Act 2015 (NSW) (Act), developers will be required to lodge a 2% (of the contract price for the building work) bond to the Department of Fair Trading to secure any future defective building work. The commencement date for the defects bond scheme will now likely be postponed from 1 July 2017 to 1 January 2018. Further details about the scheme can be found here.
The Act currently provides 1 July 2017 as the commencement date for the new defects bond scheme. However the Electronic Transactions Legislation Amendment (Government Transactions) Bill 2017 (NSW) (Bill) contemplates a new commencement date of 1 January 2018. The Bill can be found here.
The Bill is yet to be debated in the legislative assembly and with the next parliamentary sitting day not until 20 June 2017, confirmation of the Bill and any delay to the commencement date will not be determined until at least 20 June 2017. This means relevant industry participants will need to wait until 10 days (at the earliest) prior to the current commencement date (1 July 2017) to know whether they will need to comply with the scheme requirements as of 1 July 2017.
We anticipate that the requirements under the defects bond scheme will likely not come into effect until 1 January 2018, however we recommend that all industry participants for the time being be prepared for the changes as if they were to come into effect on 1 July 2017.
This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.