Strata Building Bond and Inspections Scheme glossary

Key terms to help you understand SBBIS.

About the glossary

This glossary is to help developers, building inspectors and owners corporations understand the key terms used as part of the Strata Building Bond and Inspections Scheme.

A | B | C | D | F | I | L | M | N | O | P | R | S | W

A 

Approved issuer

A building bond must be issued from:

  • an authorised deposit-taking institution or
  • a general insurer authorised to conduct new or renewal insurance business

who are regulated by the Australian Prudential Regulation Authority (APRA).

The issuing authority must be listed on the following register links:

which is maintained by APRA.

B

Building bond

The developer (not the builder) of a strata scheme must give the Secretary a security - a building bond. The building bond is to be 2% (or prescribed percentage in the regulation) of the total price paid or payable of all contracts for the building work.

The building bond may be either a bank guarantee or ‘bond’ issued by an approved issuer and must contain the unique identifier number issued by the NSW Planning Portal.

The building bond must be lodged, which includes approval by the Secretary, before any application is made for an OC which allows people to occupy the building - or partial OC, allowing the completed part of the building to be occupied. A penalty may apply if a developer does not lodge the building bond with the Secretary and receive approval, before an application is made for an OC.

The building bond must comply with the Secretary’s building bond guideline.

See sections 207 and 208 of the Strata Schemes Management Act 2015.

Building Commission NSW

Refer to The Secretary explanation below.

Building inspector

A building inspector is an individual. The building inspector is a member of a Strata inspector panel (SIP).

See Section 193(1) of the Strata Schemes Management Act 2015 and Clause 45 of the Strata Schemes Regulation 2016.

Building work

Building work is wider than the Home Building Act 1989 definition of ‘residential building work’ by expanding application from dwelling to building (refer to Schedule 1)  

Specific and additional thresholds that apply are:  

  • the contract for the building work was entered into from 1 January 2018, or if there is no contract, it applies to building work commenced from this date
  • building work that is carried out on a building, or a part of a building, that is part of the parcel of a strata scheme that is:
    • residential building work, or
    • carried out on a building, or a part of a building, used or proposed to be used for mixed use purpose that includes residential purpose
  • the building work was carried out for the purposes of, or contemporaneously with, the registration of a strata plan or a strata plan of subdivision of a development lot.

However, SBBIS does not apply to: 

Note:  

  • Mixed use purpose could be, for example, a development that includes a combination of residential, retail, commercial, hotel, but it must include residential.
  • Home building compensation cover refers to for example, new low-rise ‘multi-unit’ buildings of three storeys or less. 
     

For more details, see sections 190 and 191 of the Strata Schemes Management Act 2015 (the Act).

C

Connected person

Contract price

Generally, the contract price for building work is the total price paid or payable under all applicable contracts for the building work at the date just prior to the issue of any occupation certificate (not the contract price before construction commences). The amount secured by the building bond is calculated at this time (not at the start of the build) to include all variations, additions and price fluctuations etc.

All work that is conducted in relation to the contract will determine the bond amount. This includes, but is not limited to:

  • construction and fit out costs (not including appliance and prime cost items)
  • demolition and site preparation
  • excavation
  • car parking
  • costs for the common property that is included in the property plan, including landscaping, pools, fencing and gates
  • professional fees, and
  • taxes applied in the calculation of the as-built construction.

See Section 189 of the Strata Schemes Management Act 2015 and Part 8 of the Strata Schemes Management Regulation 2016.

Cost report

When there is no written contract for the building work (for example where the developer is also the builder), or the parties to the building contract are connected, the contract price is the price set out in a cost report prepared by a quantity surveyor. The quantity surveyor must be a member of the Australian Institute of Quantity Surveyors or the Royal Institution of Chartered Surveyors and must not be connected to the developer, builder, a bank or other person providing finance for the building work.

A cost report prepared by a quantity surveyor must include:

  • all work that is conducted in relation to the contract, as list above under Contract price, and
  • a certificate by the quantity surveyor that they have inspected the as-built drawings and specifications for the strata plan.

NCAT determination of contract price

NCAT, on application, may make an order specifying the amount of the contract price of building work - to determine the amount of a building bond. 

For further details on NCAT, refer to ‘Tribunal (NCAT) orders – contract price and access to a strata scheme’, under ‘N’ below.

D

Defective building work

Section 189 of the Strata Schemes Management Act 2015

Developer

Section 189 of the Strata Schemes Management Act 2015

F

Final report

Section 189 of the Strata Schemes Management Act 2015

I

Interim report

Section 189 of the Strata Schemes Management Act 2015

L 

Lot

A strata scheme is a building or group of buildings that has been divided into 'lots' which may be individual apartments. When a person buys a lot, they also share ownership of common property with other lot owners.

M

Mixed use

A mixed-use development or building is one that combines different types of spaces, for example residential (units), retail (shops), commercial (offices) or a hotel. It must include at least one residential lot.

N

Tribunal (NCAT) orders – contract price and access to a strata scheme

Access

The NSW Civil and Administrative Tribunal (NCAT), on application, may make an order requiring the occupier of a lot in a strata scheme or any other person to allow access to the lot or any other part of the parcel for the purpose of or in connection with an inspection or rectifying defective building work.

An application may be made to NCAT for an order by an owners corporation, the developer, a building inspector or a person entitled to enter any part of a parcel of a strata scheme to perform an inspection or rectify defective building work (such as a builder).

Contract price

NCAT, on application, may make an order specifying the amount of the contract price of building work - to determine the amount of a building bond. If there are other incidental proceedings being dealt with by a Court, then the application must be made by the Supreme Court of NSW.

An application may be made to NCAT for an order, by an owners corporation, the developer, or the Secretary. A determination under this section of the amount of the contract price of building work does not bind a court or tribunal in any other proceedings.

See section 211 of the Strata Schemes Management Act 2015.

O

Occupation certificate (OC)

See sections 6.4 and 6.9 of the Environmental Planning and Assessment Act 1979.

For the purposes of the Strata building bond and inspections scheme, ‘the’ or ‘any’ OC issued for the strata scheme refers to the first OC issued (including partial).

Also, refer to section 3C of the Home Building Act 1989.

Owners corporation

Owners corporation means an owners corporation constituted under section 8 of the Strata Schemes Management Act 2015  for a strata scheme.

P

Professional fees

Professional fees include but are not limited to fees incurred from the work involved in, or involved in coordinating or supervising any work in section 190 of the Strata Schemes Management Act 2015, and clause 50 of the Strata Schemes Management Regulation 2016 for the building works. The period may be extended such as from the development application and beyond the issue of an occupation certificate and include things like consultations, reports in engagements etc.

R

Residential building work

Residential building work has the same meaning as it has in the Home Building Act 1989.

S

The Secretary

Section 4 of the Strata Schemes Management Act 2015, defines the Secretary as:

  • the Commissioner for Fair Trading, Department of Customer Service, or
  • if there is no person employed as Commissioner for Fair Trading—the Secretary of the Department.

Strata inspector panel (SIP)

A building inspector must be a member of a strata inspector panel (SIP). A SIP can only be provided by an authorised professional association (APA), as listed in the Strata Schemes Management Regulation 2016.

A SIP may be established by an authorised professional association (APA).

APA means any of the following bodies:

  • the Housing Industry Association Limited (ACN 004 631 752)
  • the Master Builders Association of New South Wales Pty Ltd as registered under the Industrial Relations Act 1996
  • the Australian Institute of Building (ACN 000 165 248)
  • the Australian Institute of Building Surveyors (ACN 004 540 836)
  • the Australian Institute of Building Consultants Pty Ltd (ACN 605 683 690)
  • the Australian Society of Building Consultants Incorporated (NSW Y1805133)
  • the Institute of Building Consultants Inc (NSW Y0848702)
  • Engineers Australia Pty Limited (ACN 001 311 511)
  • the Association of Accredited Certifiers Incorporated (NSW INC9880607)
  • the Australian Institute of Quantity Surveyors Ltd (ACN 000 093 005)
  • RICS Australasia Pty Ltd (ACN 089 873 067).

Each of these associations will have their own processes and criteria to determine whether a person may perform building inspections and produce reports for the purposes of SBBIS.

Inclusion on a panel qualifies the person to be a building inspector.

Subdivision

Subdivision refers to the process of dividing a development lot into multiple smaller lots and common property, for example a residential unit block.

W

Written notice

A written notice includes email notifications.

SBBIS communications is administered by electronic transmissions.

Contact us

Strata Building Bond and Inspections Scheme

You can contact the Strata Building Bond and Inspections Scheme (SBBIS) team at any stage during the strata bond process on stratabond@customerservice.nsw.gov.au.

If you have any technical issues with either of the online portals, please contact:

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