The Residential Apartment Buildings Act and increased regulation
The NSW Government has introduced the Residential Apartment Buildings (Compliance and
Enforcement Powers) Act 2020 (Act). The introduction of the Act is in response for the need to further regulate the construction of works on residential apartment buildings. The Act is scheduled to commence 1 September 2020.
Recent high profile instances of structurally deficient apartment buildings, including the Opal Tower and Mascot Tower have increased public pressure on the NSW Government to tighten its control on the building sector in this particular area.
The Act contains provisions which aim to prevent developers from carrying out building works which may result in defects, leading to significant danger and economic loss to the residents and the community in general.
Application of the Act
The Act applies to apartment buildings completed in the last 10 years or apartment buildings not yet completed that fall within the definition of a Class 2 Building under the Building Code of Australia. That being, a building of 2 or more separate dwelling units that may include mixed-use residential and commercial buildings.
Meaning of a Developer
Relevantly, a developer is broadly defined under the Act as:
a person who contracted, arranged for, facilitated or otherwise caused the building work to be performed;
the owner of the land;
the principal contractor under the Environmental Planning and Assessment Act 1979;
the developer within the meaning of the Strata Schemes Management Act 2015; or
any other person prescribed by the regulations.
The Act requires developers to notify the Secretary of the Department of Customer Service (Secretary) of the intended completion of building from 12 months to 6 months before an application for an occupation certificate is made.
This provides the Secretary an opportunity to monitor and regulate the building works of applicable residential apartment buildings with the aim to detect and rectify serious building defects.
The Secretary and the Building Commissioner have been granted investigative powers to facilitate the inspection process and detect serious building defects.
These powers include the following:
Examination and inspection of works;
retrieval and removal of samples;
Directing a person to produce records for inspection;
Directing that a part of building works be demolished if deemed necessary to so because it is connected with an offence or a serious building defect; and/or
Directing that certain works be undertaken to inspect the performance of such works
The Act grants the Secretary broad powers to issue various orders. The Secretary may make an order prohibiting the issue of an occupation certificate or registration of a strata plan if the notice of intended completion is not provided by the developer within the timeframe set out in the Act. This order may also be made if the Secretary determines a serious defect is present in the building.
Without an occupation certificate, developers will be unable to settle the off the plan sale of apartments and building contractors will be unable to reach practical completion and therefore remain liable for various obligations under their building contract.
Where the Secretary determines that building work could result in significant harm or loss, or lead to serious building defects, the Secretary has power to issue a stop work order. The Secretary can then manage the non-compliance and impose additional conditions in respect of such building works.
If the Secretary has a reasonable belief that the building works are being carried out in a manner that would result in a serious defect, the Secretary has the power to issue rectification orders.
Under the Act, a serious defect is defined as:
a defect due to a failure to comply with the Building Code of Australia, the relevant Australian Standards or approved plans;
a defect attributable to defective design, workmanship or materials that causes or is likely to cause the building to be unable to be used or inhabited for its intended purpose, the destruction of the building, or a threat of collapse of the building;
a defect prescribed by the regulations; or
the use of a banned building product.
Developers can be fined up to $110,000 for failing to comply with the orders of the Secretary and an additional fine of $11,000 for each day the offence continues.
Whilst the other states and territories have regulations which allow rectification of defects, they are not as extensive as the NSW legislation which may lead to interstate pressure to bring their own building industries into line.
Henry William Lawyers can assist with any building and construction related enquires. Feel free to contact our people:
Ron Zucker +61 410 590 111
Vincent Tripodina +61 408 228 108
Chelsea Woodward +61 404 065 899
Anna Polhill +61 431 174 352