A new strata building bond and inspection scheme commenced on 1 January 2018. The scheme applies to building contracts entered into from 1 January 2018 for new residential or mixed strata properties of four storeys or higher. The reform is designed to encourage developers to address building defects early to avoid litigation.
Developers are required to pay a building bond equal to 2% of the contract price for the work to the Secretary of the Department of Finance. The Department will hold the bond for two years. An independent building inspector must be engaged by the developer to undertake inspections. An interim inspection occurs 15-18 months after completion of the work, and a final inspection occurs at 21-24 months after completion. If the interim inspection uncovers defects which are not rectified by the final inspection, the owner can use the bond for rectification.