Developer undertaking to fix serious defects in strata

Key information

• A developer undertaking may be applicable when a developer and the Secretary of the New South Wales Department of Customer Service agree to fix serious defects in a strata building at the developer's own cost.
• It is a voluntary undertaking and a sign of good faith by a developer that they want to make the building work right. 
• Developer undertakings are made under legislation and are a legally binding undertaking between the developer and the Department for the benefit of the owners corporation although an owners corporation are not directly involved in any discussion. 
• The developer agrees to remediate (fix) identified serious defects within an agreed time frame.
• The developer provides security (for example, a bank guarantee) for some future problems with defects for a suitable period.   

Benefits of an undertaking

A developer undertaking is an arrangement made by the developer with the Department but for the benefit of the owners corporation. It is focused on remediation of defects being completed. The benefits include:

• provides a commitment that aims to ensure remediation of “serious defects” as defined in the Residential Apartment Buildings (Compliance and Enforcement Powers) Act and Design and Building Practitioners Act
• provides confidence to the owners corporation as there is generally security for the remediation to be done
• demonstrates that a developer is willing to remediate serious defects without other enforcement action or new proceedings brought by the owners corporation.

List of current developer undertakings