In brief - Legislation appears to have been deferred until 1 January 2018
In October last year, we identified some key concerns about the proposed "developer bond regime" to be introduced by the new Part 11 of the Strata Schemes Management Act 2015 (NSW) in our article "Seven things every developer, builder, financier and strata manager should know about the imminent application of Part 11 of the Strata Schemes Management Act 2015
The regime entails (amongst other things) the provision of a 2 per cent bond by developers engaged in residential building work associated with the creation of a strata scheme, and a defects inspection procedure that provides a trigger either for the ability of the strata scheme to call on that bond, or for the return of the bond to the developer.
This legislation was due to take effect from 1 July 2017 in respect of applicable building contracts executed on or after that date.
However, it appears now that the relevant date will be deferred until 1 January 2018. The deferral is contained within the omnibus Electronic Transactions Legislation Amendment (Government Transactions) Bill 2017 (NSW), introduced into the New South Wales Legislative Council on 24 May 2017. The bill's second reading speech
contains the following explanation for the deferral:
This amendment acknowledges that a number of issues have arisen, which mean that it is prudent to delay commencement of the scheme. Since 2016 Standards Australia has been working with a group of industry experts to develop a new national standard known as AS4349.2 – Group titled properties. The standard is important as it will form part of the defect inspection report that is applied by the scheme. Unfortunately, the standard is not complete and unlikely to be finalised by Standards Australia until after July 2017.
Furthermore, over the past five months NSW Fair Trading has been engaging with peak bodies in the legal, strata and building sectors to prepare for the scheme. NSW Fair Trading acknowledges stakeholders' continued support for the scheme but also notes feedback that the July 2017 commencement date would not afford some participants sufficient time to develop their supporting processes and procedures. The amendments will mean that the scheme will only apply to construction contracts signed or work that commences from 1 January 2018.
We will provide further details regarding these developments as they come to hand.
This article has been published by Colin Biggers & Paisley for information and education purposes only and is a general summary of the topic(s) presented. This article is not specific legal or financial advice. Please seek your own legal or financial advice for any questions you may have. All information contained in this article is subject to change. Colin Biggers & Paisley cannot be held responsible for any liability whatsoever, or for any loss howsoever arising from any reliance upon the contents of this article.