The New South Wales Parliament passed two important bills earlier this year that will potentially increase the risk to landowners, not just developers, being mandated to carry out building rectifications. Under the Design and Building Practitioners Act 2019 and the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 developers are now obligated to inform the Building Commissioner at least six months prior, but not more than 12 months prior, that an Occupation Certificate will be issued, giving the commissioner the opportunity to inspect the development.

The Residential Apartment Buildings Act in particular will be a game-changer and is the focus of this article. The law took effect on September 1, 2020.

Serious defects must be fixed

“Serious defects” in residential apartment buildings can now be ordered to be corrected by the Secretary of the Department of Customer Service which will, in practice, be applied by the NSW building commissioner and staff.

Developers can be ordered to rectify building work “if the secretary has a reasonable belief that building work was or is being carried out in a manner that could result in a serious defect”.

These orders to correct defects can be used up to ten years after an Occupation Certificate is issued. The secretary is also able to delay an occupation certificate by issuing a “prohibition order” to ensure that defects are fixed before residents take possession of their apartment.

The definition of “serious defect” includes:

• Failure to comply with the performance requirements of the Building Code of Australia;
• Defects likely to deny habitability or use of the building for its intended purpose;
• Use of banned building products.

This order to rectify defects in particular, is likely to provoke discussion and possibly influence other States and Territories legislation, as this issue caused disquiet for the attempt by the Victorian Building Authority in 2017 to have the builder rectify non-compliant cladding at the Lacrosse Building in Melbourne.

Regulators to inspect buildings

The Department of Customer Service has appointed authorised officers, the building commissioner and his staff, to inspect buildings and issue prohibition and rectification orders when needed.

See more on the Residential Apartment Buildings Act 2020.

See more on the Design and Building Practitioners Act 2019.