Resolving serious defects in residential apartment buildings less than six years old: Project Intervene
We can help you by negotiating an agreement (an undertaking) with the developer to properly fix serious defects at their cost.
- Project Intervene is a program to resolve serious defects in the common property of buildings that are up to ten years old.
- It aims to avoid costly and time-consuming legal options like going to court. Instead, the Department negotiates an undertaking with the developer for the benefit of the owners corporation. All parties enter voluntarily but once an undertaking is signed it is legally binding.
- An owners corporation can register for the program up until 30 June 2023. iCIRT-rated developers can also nominate a building with us.
- For a building to be included in Project Intervene, a serious defect must meet the test in the legislation and be related to a building element. Other defects might be remediated at the same time but would sit outside Project Intervene and have to be agreed to separately by the developer.
- Under Project Intervene, there is no cost to the owners corporation as the developer pays for the remediation works and all associated costs.
- Owners corporations with a matter before a tribunal or court are still eligible for Project Intervene.
What is Project Intervene?
Project Intervene uses the powers of Fair Trading to compel developers/builders to remediate serious defect/s.
These powers permit the regulator to issue to a developer/builder a range of work orders for fixing non-compliant building work.
Project Intervene is different. It seeks to reach agreement with a developer (or builder) about the serious defects and the remediation work and thereby avoid litigation which can be very costly. Project Intervene also ensures remediation work is completed to an appropriate standard and imposes timeframes.
What is eligible for Project Intervene?
A serious defect in a residential apartment (class 2) building must meet a three-part test. It must have:
- a serious defect as defined in the Residential Apartment Buildings Act, and, related to one of the building elements (common property)
- a developer or a builder who is still in business
- typically, an occupation certificate issued no longer than six years ago. In some circumstances we can look at a building where the occupation certificate was issued up to ten years ago.
We are focussing on buildings with four or more storeys as these are likely to have a higher impact on residents.
Who is not eligible?
The building is not eligible for Project Intervene if:
- the developer or the builder are no longer trading
- it’s a residential apartment building with three storeys or fewer
- the building does not have any class 2 part
- the occupation certificate was issued more than ten years ago.
What is a serious defect?
A serious defect has a specific definition in the legislation, namely that it:
- arises from a failure to comply with the Building Code of Australia, Australian Standards or approved plans
- is likely to cause the inability to inhabit or use, the destruction of or threat of collapse of part of the building due to defective design, faulty workmanship or materials
- involves the use of a building product that is prohibited by the Building Products (Safety) Act 2017 (NSW)
- includes any defects which are prescribed by the Regulations (if any).
What are the benefits?
The benefits of the program are that serious defects are resolved and all parties spend less time in litigation. Other benefits include:
- we are using regulatory powers to compel the developer or builder to fix the serious defects
- there is an undertaking between the Department of Customer Service and the developer to remediate serious defects
- an independent Undertaking Manager is appointed to ensure the remediation work specified in the undertaking is delivered
- a superintendent is appointed to oversee remediation work is carried out in a compliant manner. The Superintendent is independent and has experience in the building and construction industry
- the developer pays for remediation work and associated costs
- quicker resolution time of the serious defects
- not having to deal with the legal process in court or before a tribunal
- more efficient resolution of defects which provides certainty and minimises the potential for further damage from unresolved defects
- supportive process for an owners corporation and developer or builder
- the developer acts in good faith as a responsible corporate citizen
- the developer has the opportunity to positively impact their iCIRT rating and consequent insurance profile.
Register for Project Intervene
How to apply if you're an owners corporation
To register your building to be part of Project Intervene:
- Download A template for owners corporations to use when noting serious defects in their building (DOCX 216.16KB)
- Use the checklist which is in the template to ensure you provide as much information about your building as possible, including any expert findings about the serious defects.
- Go to Fair Trading’s Building Complaint online form. While completing the online form, you will need to attach your completed template as evidence of serious defects in your building.
After you apply
After you have registered your building (by downloading and using the template for owners corporations and completed the online Fair Trading Building Complaint form), a team member from Project Intervene will review your information and contact you about next steps within 20 working days.
Next steps can include asking you to supply supporting evidence (such as photos or reports if you have them) of serious defects.
What are the steps in Project Intervene?
- Confirm the building(s) is less than six years old and the developer is still in business. In some cases, we can look at a building up to ten years old.
- Applications for Project Intervene must be authorised by the strata committee/owners corporation (for example the strata manager). Hold a meeting of the owners corporation and vote on registering for Project Intervene. Minutes of a vote would be evidence of a decision.
- Register for the program by opting in through the NSW Fair Trading complaint form. See ‘How to apply?' above. (Note: provided the complaint of a serious defect is registered with Fair Trading within the six-year statutory period it is still covered even though the remediation work may not start or be complete until after the warranty period.
Alternatively, the developer can nominate a building
- A developer who is iCIRT-rated or a builder may approach Project Intervene and nominate a building for Project Intervene.
- A developer may also be invited to meet with us once an owners corporation has registered with the program. (Note: It is optional to join Project Intervene but once an undertaking is signed, it is legally binding).
- If your building is eligible, we will engage Sedgwick - a consultancy company who acts on our behalf - to arrange for an inspection of your building to be carried out with the appropriate specialists. They will use reports you have already had prepared, if made available.
- Any identified serious defects will be documented in a draft report.
- The draft findings of the inspection will be shared with the developer for feedback.
This inspection and report process takes around two months.
- The Department of Customer Service may issue a draft Building Work Rectification Order (BWRO) to the developer in respect of the serious defects or accept an undertaking
- If the developer agrees to enter an undertaking, they sign the Undertaking Process Deed Poll and commit to the process of finalising an undertaking. An Undertaking Manager is appointed at this time. The Undertaking Manager will assist the developer to finalise the list of serious defects in consultation with the owners corporation.
- If the developer does not agree to enter into an undertaking, the Department will issue the final BWRO which must be complied with.
- Once the serious defects and remediation is agreed, the developer offers an undertaking to the Department. If the terms are agreed, the undertaking will be accepted. The undertaking is an agreement between the developer and the Department of Customer Service for the benefit of the owners corporation.
- The developer generally provides a security (for example, a bank guarantee) for the remediation work and performance of the undertaking. This varies from building to building but is typically 2 per cent of the remediation work but may differ in some cases. It is held until six years from the date of the occupation certificate or an agreed time-period, depending on the age of the building or nature of the serious defects.
- To get the benefit of the undertaking, the owners corporation must agree to it by vote at a general meeting. Minutes of a vote would be evidence of a decision.
- Once it is agreed, the owners corporation signs the Owners Corporation Deed Poll.
- Before any building work can start the developer (or builder) must ensure there are regulated designs for the remediation work (where necessary) which have been declared by a registered design practitioner.
- A registered building practitioner must enter the declared regulated designs into the NSW Planning Portal. The building practitioner must carry out works in accordance with the declared designs.
- A Superintendent is appointed to oversee the building work is completed in a compliant manner. They are independent of the developer.
- You should continue to liaise with the undertaking manager or superintendent if you have any questions about the program and delivery of remedial works.
- As soon as the designs are declared and uploaded on the NSW Planning Portal, the works can commence. Access will need to be provided to ensure timely completion
- The work can be undertaken by the original builder or developer and by the original tradespeople involved but does not have to be.
- At the end of building work, the building practitioner will be required to declare the works are completed in accordance with the designs
- The Superintendent will sign-off to confirm the works are completed and meets all relevant standards. The Undertaking Manager will review and provide sign-off of the completion of works
- Bank guarantee has an expiry period. If no claim is made it will expire.
What if the developer or the owners corporation don’t agree to the undertaking?
The developer undertaking is an opt-in for both the owners corporation and the developer. However, once the developer undertaking has been agreed to and the Deed Polls signed, they must comply with the undertaking. It is legally binding and can be enforced.
Up until the point when an Undertaking Deed Poll is signed, a developer or the owners corporation can opt out of the program.
Who’s who in Project Intervene
Under the Residential Apartment Buildings (Compliance and Enforcement Powers) Act (RAB Act) the definition of a developer is expanded. The owners corporation may be considered to be the developer and may have certain responsibilities under the RAB Act.
The Undertaking Manager
The Undertaking Manager’s role is to oversee the performance of the undertaking, and includes finalising the list of serious defects, ensure the remediation work outlined in the undertaking is delivered on schedule and meets the relevant standards, resolve disputes. They have experience in the building and construction industry as well as experience and skills in negotiation and dispute resolution.
They are selected from a panel of Undertaking Managers held with the Department of Customer Service. They are jointly appointed by the Department and developer but the developer pays for their cost. The Undertaking Manager role is always independent from the developer.
The Superintendent oversees work on site and liaises with the developer, Undertaking Manager, owners corporation, tradespeople and contractors. They must always act independent of the developer.
What is the common property?
The common property, as defined in the 2015 Strata Schemes Development Act, is any part of the building that is not comprised in a lot (but might be inside a lot), including any common infrastructure.
The owners corporation is responsible for the maintenance and repair of common property areas.
Waterproofing in an individual lot under tiles in wet areas such as the bathroom, the kitchen, the laundry or the balcony is common property provided there has been no renovation.
Once there has been a renovation of any wet area then it is no longer common property and is the responsibility of the individual lot or dwelling owner.
What is a building element?
To be included in Project Intervene a serious defect must be related to one of the five building elements which are identified under legislation introduced in 2020. Some examples of defects related to each building element are included below:
- Active and passive
- Fire penetration
- Fire pump room
- Fire stairs
- Fire doors
- Planter box
- Cracking in slab
- Expansion joints
- Ensuring built according to the designs (for example, columns, walls)
- Cladding / enclosure
- Moisture management
- Suitable material
- Mechanical ventilation
- Plumbing / drainage
- Services cupboard
- Research on serious building defects in NSW strata communities
- List of current developer undertakings
- Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020
- Residential Apartment Buildings (Compliance and Enforcement Powers) Regulation 2020
- Design practitioner obligations
- Work that is emergency remedial building work
- Building Products (Safety) Act 2017 (NSW)