What can builders and developers expect in the compulsory interim defects

Articles, Construction + Projects

Reminder of the timeline

With the commencement of Part 11 of the Strata Schemes Management Act 2015 (SSM Act), all multi-storey residential buildings that were constructed under a contract entered into after 1 January 2018 are subject to the Building Bond scheme and SSM Act interim and final inspection regime.

The first few milestones are approaching quickly for those builders and developers who entered contracts in January 2018.  The next major milestones for those projects which have reached completion are:

  • If the initial period of a strata scheme ends before 12 month after the completion of building work, the developer must appoint a building inspector within 12 months of that period to carry out an inspection of, and to report on, the building work; and
  • The building inspector must inspect and complete the interim report within 15 to 18 months of the completion of the building work.

Completion of building work is ascertained by reference to Home Building Act 1989 (NSW) or on the occurrence of some other event that is prescribed by the regulations as constituting completion of the work.

Builders and developers in the multi-storey development space will soon be subject of the initial stage of the SSM Act inspection regime.  Fair Trading have published online a diagram which tracks the, very process driven, building defects regime under the SSM Act.

What to expect in the interim report?

Fair Trading have published online a guideline and sample for the form of interim and final inspection reports.  There is detail in that guideline that provides much needed insight for builders and developers (and other stakeholders) on what to expect in the specified approved forms which are yet to become operative by operation of the Strata Schemes Management Regulation 2016 (NSW).

A few of those details are set out as follows:

  • Inspection requirements

The inspections must comply with the Australian Standard AS4349 suite.

  • Inspecting all or a sample of the apartments?

Where the proposed inspector is approved by the Owners Corporation, the developer may select the method of building inspection – either the whole of the strata scheme or a sample of the strata scheme.

Given that developers are paying the inspector, the “less expensive” sample inspections will more than likely be commonplace.  There is a threshold number of apartments that must be inspected of 20% and must be a mix of apartments so that a genuine cross-section of apartments are inspected.

  • Visual or invasive inspections?

Inspectors are not required to undertake destructive or invasive inspections; the inspections are limited to visual inspection.

  • Specialist work and second opinions

If an inspector considers that he/she does not have the sufficient experience or expertise to give an opinion about “specialist work”, the inspector must engage a secondary expert who is specialist in the field required.

Specialist Work includes plumbing work (other than roof plumbing work), gas fitting work, electrical wiring work, and installation or maintenance of certain refrigeration systems, air-conditioning systems,  essential services, structural, lifts, acoustic, Fire, BCA compliance, Drainage, Communications/IT, Mechanical.

  • Minimum components that will be inspected
Inspection area Building element/component
Ceilings All areas
External walls Exterior structure, cladding, balconies, tiling, balustrading, drainage to balconies
Fixtures and fittings Cabinetry
Floor Structure only
Floor finishes All areas
Internal Walls Wall trimmings including skirting boards, architrave etc.
Lighting Flood lights, security lighting, emergency lighting, internal lighting
Plumbing Hot water system, hose bibs, toilets, faucets, floor drains
Roof Roof space, roof exterior, roof plumbing, roof fixtures, membranes to roof, drainage, cracked concrete, overflows
Site works Car accommodation, garden sheds, garages paths, driveways, hardstands, fencing, gym, bike racks, tennis courts, retaining walls, site drainage, balustrading
Stairs Internal or external Handrails/balusters
Wall finishes All areas
Windows and doors Door and window furniture, water entry, operation of windows and sliding doors, adequacy of their waterproofing and structural performance ratings.

The guideline sets out a non-exhaustive list of areas and building elements which ought to be inspected.  Logic would suggest that these areas will be on the “minimum checklist” for an inspector:

Source: NSW Fair Trading

  • Specified types of defective work

The guideline lists suggested wording for inspectors to use to describe the “cause of defective building work”.  Those are expressed as being non-exhaustive and (again) logic suggests that this list will be typical of the language an inspector will use in his/her reports.

Defective building work Possible causes of defective building work
Damage (cracking and the like) – cracking see below The fabric of the element has ruptured or

is otherwise broken

Distortion, warping,

twisting

An element (or elements) has been distorted or moved from the intended location
Water penetration Moisture is present in unintended or unexpected locations

 

Material deterioration (rusting, rotting, corrosion, decay) An element or component is subject to deterioration of material or materials

 

Operational An element or component does not operate as intended

 

Installation

(generally workmanship issues, including omissions)

The element or component is subject to improper or ineffective installation, inappropriate use, or missing components

Source: NSW Fair Trading

Lessons

Builders and developers now have greater certainty on what to expect to see in the interim reports.  It is noted that inspectors may take a fairly cautious approach in recording and identifying defects in the interim reports.  As and when the interim reports are published, developers and builders have a limited window of opportunity to address the alleged defects in those interim reports, before the final inspection takes place.

Enquiries

If you have any questions about this article or generally about the building defects regime under the SSM Act, please contact Mark Yum or Nelson Arias-Alvarez on (02) 9324 5300 or get in touch online (below).

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