The issue of building defects remains a significant concern for homeowners and property investors alike.

To address these challenges, the NSW Government has implemented the Strata Building Bond and Inspections Scheme (SBBIS), a regulatory framework aimed at ensuring the timely and effective resolution of building defects in new buildings.

Central to the success of this scheme is the role played by Owners Committees, which are pivotal in overseeing defect rectification processes and ensuring compliance with the SBBIS.

Understanding The SBBIS

It’s critical for every owner to ensure that defects are reported and resolved successfully within the relevant warranty period. Otherwise, for those defects that remain unresolved outside of this period, the cost is borne by the Owners Committee rather than the builder / developer.

“Reporting defects should be the first thing that consumers do.”— NSW Building Commissioner

The SBBIS was introduced to safeguard the interests of owners in strata-titled properties by establishing a structured process for identifying and rectifying building defects. Under this scheme, developers are required to lodge a building bond equivalent to 2% of the contract price for new residential or mixed-use strata schemes. This bond serves as financial security to cover the cost of rectifying any identified defects during the initial period after completion.

Roles and Responsibilities of Owners Committees

Owners Committees, also known as strata committees or body corporates, play a crucial role in the management and governance of strata schemes. Their responsibilities include overseeing the day-to-day operations of the building, managing finances, and crucially, ensuring compliance with the SBBIS in relation to defect resolution.

Compliance with the SBBIS

For Owners Committees, compliance with the SBBIS involves several key responsibilities:

1. Engaging Independent Building Inspectors: Owners Committees are responsible for engaging independent building inspectors to conduct defect inspections during the initial period after completion. These inspections are critical in identifying any building defects that may be covered under the SBBIS.
2. Lodging Claims and Bonds: Upon identifying defects, Owners Committees must work with the appointed inspector to lodge claims against the building bond for necessary rectification works. This process involves adhering to specific timelines and procedures outlined under the scheme.
3. Negotiating with Developers: Owners Committees act as the representatives of owners in negotiations with developers regarding defect rectification. They are tasked with ensuring that all identified defects are adequately addressed and rectified within a reasonable timeframe.
4. Communication and Transparency: Maintaining open communication with all stakeholders, including owners and developers, is crucial throughout the defect rectification process. Owners Committees must provide regular updates on the progress of defect resolution efforts and ensure transparency in financial matters related to the building bond.

Challenges and Considerations

While the SBBIS aims to streamline the defect rectification process, challenges may arise, particularly concerning the complexity of identifying latent defects and the ensuring timely rectification.

Owners Committees must navigate the complexity of these challenges diligently to uphold their fiduciary duties to owners and protect the value of their investments.

In Summary

Owners Committees in NSW play a pivotal role in ensuring compliance with the Strata Building Bond and Inspections Scheme.

By adhering to the prescribed procedures and diligently overseeing defect rectification efforts, these committees contribute to the overall integrity and longevity of new strata-titled buildings. Through effective governance and proactive engagement, Owners Committees uphold standards of accountability and transparency, safeguarding the interests of all stakeholders involved in the strata community.

As the NSW property landscape continues to evolve, adherence to the SBBIS by Owners Committees remains essential in fostering trust, stability, and confidence among homeowners and investors alike.

See how DLP Manager works to ensure compliance with the SBBIS in this Frasers Property case study.

Contact the team at DLP Manager below for more information and a proposal for your owners committee.