Strata Building Bond & Inspections Scheme

SBBIS

The SBBIS commenced on 1 January 2018. It applies to building work for building contracts entered into from 1 January 2018. If there is no contract, it applies to
building work commenced from this date.

We carry out inspections for strata plans across NSW.

Process

First inspection: 15 to 18 months after the building work has been completed, the building inspector and Owners Corporation arrange a first inspection of the strata property. The building inspector will issue a report (interim report) identifying any defective works. The report is then uploaded to the online portal and may be accessed by the developer, the Owners Corporation, the Secretary, and the builder responsible for any defective works. If no defects are identified then the building bond may be released, although not for two years from the date of completion.

If defects are identified, then the builder responsible for the defective works must rectify them before a final inspection takes place. If the defective works are not rectified before the final inspection, the building bond can be used to pay the associated costs of rectifying any defective works.

Final inspection: 21 to 24 months after the building work has been completed, the building inspector and Owners Corporation arrange a final inspection of the strata property. If the building inspector who carried out the first inspection is unavailable, then the developer must advise the Building Bond Secretary of this and follow the processes set out above in ‘Appointment of a building inspector’ to find a new building inspector.

During the final inspection, the building inspector will issue a report identifying whether the defects identified in the interim report have been rectified. The report is then uploaded to the online portal and may be accessed by the developer, Owners Corporation, Building Bond Secretary, and builder responsible for any defective works will have access to the report.

All costs associated with a building inspector (for the purposes of the inspection regime) are to be paid for by the developer.

Purpose of the Building Bond

The building bond is used to secure funds that may be drawn upon and used to pay for the rectification costs of any defective works identified in a final inspection report. If no defects are identified, the building bond is released in full to the developer. If defects are identified, the following steps apply in relation to disbursement of the building bond:

The parties must agree on the amount of costs needed for rectifying the defective works. Once a price has been agreed upon, the Building Bond Secretary will claim this amount from the issuer of the building bond and pay it to the Owners Corporation, or alternatively, the developer may release all or part of the building bond to the Owners Corporation directly.
If the parties cannot agree on the costs needed to rectify the defective works the Secretary will appoint a quantity surveyor to determine the amount needed. The costs associated with engaging a quantity surveyor are to be paid equally by the developer and Owners Corporation.

The Secretary facilitates the release of the building bond money. Any money released must be used for the purposes of rectifying defective works identified in the final inspection report, and any money that is leftover is returned to the developer.