Tough new laws governing construction, building defects and certification of apartment buildings in NSW were passed on 1 September 2020. Aiming to protect purchasers, the legislation gives authority to the NSW Building Commissioner to inspect and order the correction of "serious defects" in residential apartment buildings.

Developers can be ordered to rectify building work

The new laws are incorporated in the NSW Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 and NSW Design and Building Practitioners Act 2019.

Under the legislation, developers can now be ordered to rectify building work if, in the words of the government, there is a "reasonable belief the building work was or is being carried out in a manner that could result in a serious defect".

Occupation certificates to be delayed if building defects not rectified

The commissioner can delay the issuing of an occupation certificate if the builder has used banned building products, or if there are defects that make the property uninhabitable.

Without an occupation certificate, developers cannot settle the sale of apartments, most of which are sold off the plan. These powers of intervention can be used for up to ten years after an occupation certificate is issued and also apply retrospectively to buildings built within the last decade.

New properties must comply with Building Code of Australia

The definition of a "serious defect" includes failure to comply with the requirements of the Building Code of Australia. The code was reviewed and strengthened following horrific apartment building fires caused by cheap flammable cladding. A building commissioner was also appointed in 2019 after serious building defects were discovered at Sydney's Opal and Mascot towers.

For the sale of any property to be completed, the building must comply with the standards set in the Building Code. (See Building Industry Reforms, NSW Fair Trading.) This ensures that buyers cannot be forced to settle on properties with building defects.

Nonetheless, it's wise for buyers, especially those buying off the plan, to obtain legal advice before settling.

Developer rating system introduced to protect buyers

Building commissioner David Chandler says about 20 per cent of apartment buildings in NSW have significant problems, such as structural, waterproofing and fire-rating systems that he currently needs to resolve.

Among many positive changes being made by the commissioner, developers will now be rated on their record of building failures, financial problems, complaints and insurance claims. The Risk Rating Register is expected to be available by mid-2021.

Occupation certificate inspections and safety compliance notices

In the meantime, the commissioner's office is carrying out occupation certificate inspections, where the issuing of safety compliance notices will determine the rating for each development. The more rating notices a development receives, the higher its risk rating. This will prove invaluable to buyers.

The new laws also provide that from June 2020, builders have a legal duty of care to protect property owners. This is critical for owners seeking to take legal action against shoddy builders.

Merrill Phillips
Stacks Law Firm

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