Stage 7: Paying the building bond
Who is involved
- Developer
- Owners corporation
- The Secretary
Who has tasks in the Strata Hub
- Developer
- Owners corporation
What happens at this stage
The whole or part of the amount secured by the building bond may be claimed or realised by the Secretary between 2 and 3 years after the occupation certificate issue date.
Building bond payments or release for cancellations may occur in these 4 scenarios when transactions are made through the Strata Hub:
1. Interim report – no identified defective building work
If no defects are identified in the interim report and the developer successfully applied to the Secretary to waive the requirement of a final report, the interim report becomes the final report. If the Secretary considers it appropriate, the Secretary may provide a release to the developer to enable the building bond to be cancelled via the Strata Hub.
The building bond may be cancelled and returned to the approved issuer, within 90 days of the final report.
2. Final report – no identified defective building work (rectified)
If no defects are found in the final report and the Secretary considers it appropriate, the Secretary may provide a release to the developer to enable the building bond to be cancelled via the Strata Hub.
The building bond may be cancelled and returned to the approved issuer, within 90 days of the final report.
3. Final report – identified defective building work (not rectified)
Defective building work is identified in the final report. An amount may be paid to the owners corporation and any balance cancelled and released to the developer (if any).
The payment and cancellation may be proposed within 90 days after the final report is given to the Secretary.
4. Consent of the developer plus application by owners corporation and developer to the Secretary
After an interim building inspection is carried out, and the report is provided and accepted by the Secretary, the Secretary may consider the interim report to be the final report. This may facilitate a claim or realisation for payment to the owners corporation or cancellation of the building bond to the developer when an application is made to the Secretary in the Strata Hub.
This may occur at a time after 2 years from the occupation certificate issue date, and 90 days after the final report.
The Secretary will notify the owners corporation, developer and builder in writing 14 days before any proposed bond payment from the building bond.
Reduced amount for payment to owners corporation
The Secretary may refuse to claim or realise an amount, or reduce the amount payable, if the Secretary is satisfied that the developer or the builder responsible for defective building work was unreasonably refused access to the strata building for the purpose of rectifying defective building work.
Overview of the 8 stages of the scheme
Developer registers their project and lodges the building bond in the NSW Planning Portal.
Within 12 months of the building work being finished, the developer must appoint a building inspector.
Between 15 to 18 months after the building work is finished, the building inspector will complete an interim inspection and report.
This can happen at any time, but the builder needs to rectify any identified defects before Stage 5 (indictive period is between 18 to 21 months after the building work is finished).
Between 21 to 24 months after the building work is finished, the building inspector will complete a final inspection and report.
If there is defective building work identified in the interim report that has not been rectified, it will be identified in the final report. The cost to rectify the defective building work identified in the final report must be agreed or determined.
The building bond is used to pay for the rectification work identified in the final inspection and report. The building bond payment process should be completed between 2 to 3 years after the building work was finished.
The owners corporation completes the rectification of the defective building work. If the rectification costs less than the building bond, the balance is returned to the developer.
Contact us
Strata Building Bond and Inspections Scheme
You can contact the SBBIS team at any stage during the SBBIS process via email at stratabond@customerservice.nsw.gov.au
For technical issues, contact the Strata Hub (Stages 2-8) via email at stratasystem@customerservice.nsw.gov.au