Legislative changes addressing build quality of residential apartments

Recent legislation has been enacted that provides for improvements to the quality of residential apartment constructions. The Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 ( Act ) and the Design and Building Practitioners Act 2020 commencing July 2021 have the effect that the Secretary of the Department of Customer Services ( Secretary ) will undertake a proactive investigation and rectification of serious defects in residential apartment buildings.

The Act introduces an obligation imposed on developers to provide the Secretary with an expected completion notice at least 6 months, but not more than 12 months prior to applying for an occupation certificate in relation to building works.

The Act empowers the Secretary to issue to developers:

1. A stop work order, requiring the developer to stop works being carried out. The Secretary may issue such an order if they are of the opinion that the building work is, or is likely to be carried out in a manner that could result in significant harm or loss to the public or current or future occupiers of the building or significant damage to property.

2. A building work rectification order, requiring the developer to carry out, or refrain from carrying out building work, in order to eliminate, minimise or remediate an actual or potential serious defect. The Secretary may issue such an order if they are of the belief that building work was, or is being carried out in a manner that could result in a serious defect.

3. An order prohibiting the issue of an occupational certificate, or the registration of a strata plan for a strata scheme where:

a. A developer failed to provide the required notice to the Secretary of when it expects to apply for an occupational certificate;

b. The Secretary is satisfied there is a serious defect in the building; or

c. A building bond for rectifying defective building work has not been given to the Secretary. This is required under s207 of the Strata Schemes Management Act 2015 (NSW).

In support of the Secretary’s role, the Act also establishes for authorised officers to have investigative and enforcement powers to ensure compliance with the requirements of the Act. This includes entering a strata scheme’s common property without permission or a search warrant. This power also provides an authorised officer to do anything that is necessary in their opinion, including ‘examine and inspect any thing’, ‘take and remove samples of a thing’ and ‘open up, cut open, or demolish building work’.

Established penalties for a breach or non-compliance with the requirements of the Act have been provided. Breach of a stop work order and non-compliance with a building work rectification results in penalties for corporations of up to $330,000 with an additional $33,000 for each day the offence continues. The maximum penalty for non-compliance with an expected completion notice, setting out the expected date of application for an occupation certificate is $110,000 for a body corporate or $22,000 in any other case.

The Act commenced on 1 September 2020, so accordingly developers and other industry participants need to be aware of and take the necessary action to be equipped for these new guidelines. It is not only current residential apartment buildings that are affected by this new regime, as these new regulations apply to currently incomplete developments and developments constructed within the previous 10 years.

This article was co-authored by Law Cadet Karsandra Mantis.

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