Strata Schemes Management Act 2015 No 50
Current version for 1 July 2020 to date (accessed 10 July 2020 at 07:17)
Part 11 Division 3
Division 3 Building bonds
207   Bond to be given
(1)  The developer of a strata scheme must give the Secretary a security (a building bond), in terms acceptable to the Secretary, for building work to which this Part applies before an application is made for an occupation certificate under the Environmental Planning and Assessment Act 1979 for any part of a building for which the building work was done.
(2)  The amount secured by a building bond is to be 2% of the contract price for the building work.
(3)  The purpose of the building bond is to secure funding for the payment (up to the amount secured by the bond) of the costs of rectifying defective building work identified in a final report under this Part.
(4)  If the building work to which this Part applies comprises only part of the building work to which a contract price applies, the amount secured is to be 2% of the part of the contract price applicable to the building work to which this Part applies.
(5)  A developer must not fail to comply with this section.
Maximum penalty—10,000 penalty units and, in the case of a continuing offence, a further 200 penalty units for each day the offence continues.
207A   False or misleading information in relation to contract price or building bond
A developer must not knowingly give to the Secretary information in relation to the contract price of building work, or the amount required to be secured by the building bond for building work, that is false or misleading in a material particular.
Maximum penalty—
(a)  in the case of a corporation—1,000 penalty units, or
(b)  in any other case—200 penalty units.
208   Form of building bond
A building bond may be in one or more of the following forms—
(a)  a bank guarantee issued by an authorised deposit-taking institution,
(b)  a bond issued by an approved insurer,
(c)  another form of security that is prescribed by the regulations for the purposes of this section.
209   When amount secured by building bond payable
(1)  The whole or part of the amount secured by a building bond may be claimed or realised by the Secretary for payment as follows—
(a)  to the owners corporation to meet the costs of rectifying defective building work identified in the final report on the work, if the report identifies the defective building work,
(b)  to the owners corporation, with the consent of the developer, on application to the Secretary by the owners corporation and the developer,
(c)  to a building inspector to meet the costs of the inspector for an inspection or report under Division 2,
(d)  to a person who has prepared a report referred to in section 209A, to meet the developer’s share of the costs of obtaining the report.
(1A)  The amount that may be claimed or realised for payment under subsection (1) (a) is an amount that the owners corporation and developer have agreed should be paid or the amount determined by the Secretary.
(2)  An application under subsection (1) (b) must be made within the period prescribed by the regulations for the purposes of this section.
(2A)  An amount may be claimed or realised for payment under subsection (1) (c) or (d) only if the costs concerned have not been paid and the developer—
(a)  has died or ceased to exist, or
(b)  is bankrupt or insolvent, or
(c)  after due search and inquiry, cannot be found in Australia.
(3)  An amount secured by a building bond must be claimed or realised under this section within—
(a)  2 years after the date of completion of building work for which it is given, or
(b)  90 days after the final report on the building work is given to the Secretary by the building inspector,
whichever is the later.
(4)  The developer must take any necessary steps to enable the Secretary to claim or realise an amount secured by a building bond given by the developer and required for payment in accordance with this Division.
Maximum penalty—10 penalty units.
(5)  The Secretary may refuse to claim or realise an amount, or reduce the amount otherwise payable, under this section if the Secretary is satisfied that the developer or the builder responsible for defective building work was unreasonably refused access to the strata parcel for the purposes of rectifying that work.
(6)  The Secretary must give the owners corporation and the developer of a strata scheme written notice of any proposed payment under this section in relation to the strata scheme.
209A   Determination of amount when owners corporation and developer don’t agree
(1)  For the purposes of enabling the Secretary to determine an amount under section 209 (1A), the Secretary may—
(a)  require the owners corporation or the developer (or both) to provide any information or reports that the Secretary may require, or
(b)  arrange for a person whom the Secretary considers to be appropriately qualified to provide a report to the Secretary in relation to the work required or the costs involved in rectifying the defective building work concerned.
(2)  The costs of obtaining any report arranged by the Secretary are to be borne by the owners corporation and developer in equal shares, except in the circumstances (if any) specified in the regulations for the purposes of this section.
(3)  The Secretary may give to a person whom the Secretary has arranged to provide the report any documents relating to the building work that the Secretary considers would assist the person to prepare the report.
210   Use of amounts secured by building bond
(1) Purposes for which bond amount may be used An owners corporation for a strata scheme that is paid the whole or part of an amount secured by a building bond must, within a reasonable time, use the amount paid—
(a)  for or in connection with rectifying the defective building work identified in the final report (whether or not the work affects the common property or any other part of the parcel), or
(b)  for costs related to the rectification.
(2) Repayment of excess amounts to developer An owners corporation must—
(a)  repay to the developer any amount secured by a building bond that has been paid to the owners corporation and is not required for a purpose specified in subsection (1), and
(b)  give the developer written notice of the completion of the rectification of the defective building work.
Maximum penalty—10 penalty units.
(3)    (Repealed)
(4) Owner not entitled to building bond This Act does not confer on the owner of a lot any entitlement to be paid any part of an amount secured by a building bond that is paid in respect of defective building work affecting the owner’s lot.
(5) Payments with consent not affected This section does not prevent the owners corporation from retaining any amount secured by a building bond that has been paid to the owners corporation, and using it for any purposes, with the consent of the developer.
210A   Cancellation of building bond
The Secretary may provide to a developer any release necessary to enable a building bond for building work provided by the developer to be cancelled—
(a)  if an interim report on the building work does not identify any defective building work and the Secretary thinks it appropriate in the circumstances of the case to enable the building bond to be cancelled, or
(b)  on application by the developer, with the agreement of the owners corporation, if part of the amount secured by the building bond has been claimed or realised by the Secretary, or
(c)  in any other circumstances specified in the regulations.
211   Tribunal may make orders as to access and contract price
(1)  The Tribunal may, on application, make an order requiring the occupier of a lot or part 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 under this Part or rectifying defective building work.
(2)  An application under subsection (1) may be made by an owners corporation, the developer, a building inspector or a person entitled to enter any part of a parcel of a strata scheme under section 203 or 206.
(3)  The Tribunal may, on application by an owners corporation, the developer or the Secretary, make an order specifying the amount of the contract price of building work for the purpose only of determining the amount required to be secured by a building bond.
Note.
 The contract price is determined in accordance with the regulations. See the definition of contract price in section 189.
(3A)  The developer may make an application for an order under subsection (3) only in the circumstances prescribed by the regulations.
(4)  An application under this section is to be made to, and determined by, the Supreme Court (and not the Tribunal) if the matter is incidental to other proceedings being dealt with by the Court.
(5)  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.
211A   Debt recovery if building bond not provided or insufficient
(1)  The Secretary may recover from a developer, as a debt in a court of competent jurisdiction, any amount required to be secured by a building bond given by the developer to the Secretary under this Part if—
(a)  the building bond has not been given to the Secretary, or
(b)  the building bond has been given to the Secretary but the amount secured by the building bond is less than the amount required under this Part.
(2)  An owners corporation may claim from the Secretary the whole or part of an amount recovered under this section for payment to the owners corporation.
(3)  Section 209 applies, with any necessary modifications, in relation to any such claim in the same way as that section applies in relation to a claim by the Secretary for payment of an amount secured by a building bond.
(4)  The Secretary may refuse to pay an amount under this section in the same circumstances as the Secretary may refuse to claim or realise an amount under section 209.
(5)  Section 210 (except section 210 (2)) applies, with any necessary modifications, in relation to an amount paid to an owners corporation under this section in the same way as it applies to an amount secured by a building bond that is paid under section 209.
(6)  An owners corporation must—
(a)  repay to the developer any amount that has been paid to the owners corporation under this section and is not required for a purpose specified in section 210 (1), and
(b)  give the developer written notice of the completion of the rectification of the defective building work.
Maximum penalty—10 penalty units.