Reform of the new building law for residential buildings in NSW: Beware of builders and builders

February 26, 2021

Coleman Greig Lawyers

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The Compliance and Enforcement Powers Act 2020 (NSW) (the Act) is the NSW government’s newest tool in its arsenal to address ongoing and growing concerns about the quality of housing in NSW. The law gives the Secretary of the Customer Service Department significant powers (secretary) Proactive investigation and correction of deficiencies in residential buildings that have either been built or have been built in the last 10 years.

The law began on September 1, 2020 and has resulted in a significant expansion of the definition of a developer (although for the time being this is only for the purposes of this law). The law has had a significant impact on developers and other related parties in the construction industry when they fall under the definition of a developer.

Important points to keep in mind:

  1. The law only applies to buildings that house residential buildings. This can also mean that mixed-use development is covered by the law.
  2. The law gives the secretary and any authorized officer of the secretary the authority to conduct inspections and investigations into construction work, and provides a framework for completing residential construction work, refurbishing work and remedying serious defects.
  3. Changes to the Definition of a Developer – The law has changed the definition of a developer to be a very broad and substantial definition. Instead of viewing a building contractor as a unit that either (directly) signs contracts or arranges for the construction work to be completed, the law also regards a building contractor as a person who (directly or indirectly) facilitates or arranges for the construction work to be carried out. This is a very broad definition that every party involved in the construction of residential buildings should take into account.
  4. Establishes a notification scheme so that the law requires every developer to provide an Expected Graduation Notice (NEC) by notifying the secretary at least 6-12 months prior to applying for a professional certification; and if the estimated completion date changes by more than 60 days, notify the secretary within 7 days of becoming aware of the change. There are penalties for non-compliance with the notification scheme for both businesses and individuals.
  5. Determines the commands the secretary can issue, including:
    1. Prohibition Ordinance, which can prohibit the issuing of a professional certificate and, if necessary, the registration of the shift schedule;
    2. Work Interruption Ordinance, which is issued when the Secretary has considered that the continuation of construction is being or is likely to be carried out in a manner that may cause significant damage or loss to the public, residents or the potential occupiers; and,
    3. Correction orders for construction work; if the secretary believes that the construction work has been or is being carried out in a manner that could result in a serious deficiency. A BWRO is issued to eliminate, minimize, or correct the serious or potential serious error.

Transition phase

The first six-month period after the law came into force on September 1, 2020 is a transitional period. During the transition period, the law defines a component. After the transition period has expired, a building element will be defined in accordance with the Design and Building Practitioners Act 2020 (NSW).

In the event that a developer wishes to apply for a professional certificate during the transition period, the secretary must be informed of the expected completion within 14 days of the law coming into force.

The content of this article is intended to provide general guidance on the subject. A professional should be consulted about your particular circumstances.

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