From 1 March 2021, the transitional period under the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 No 9 (the Act) (the Act commenced on 1 September 2020) will come to an end, and the provisions of the Act summarised below, will come into force.
The Act is part of the NSW Government's reforms into the building and construction industry which seek to protect consumers by preventing a building from being completed and obtaining an occupation certificate where there are serious defects.
In this article Elon Zlotnick, Darcy Todaro and Dylan Kay provide an overview of the key changes that you need to be aware of if you are involved in residential construction in NSW.
Who will this apply to?
The Act applies to "developers" of residential apartment buildings in NSW, which is defined broadly to include those who contract or arrange for building work, owners of land on which building work is carried out, principal contractors, and strata scheme developers.
What are developers' obligations under the Act?
If a developer intends to apply for an occupation certificate for any part of a building for which work is being carried out, they must give an expected completion notice to the Secretary of the Department of Customer Service (the Secretary) between 6-12 months of making the application for an occupation certificate.
If a developer expects that they will be applying for an occupation certification within six months of the commencement of building work, the expected completion notice must be given to the Secretary within 30 days of commencement of building work.
The notice must set out the date the developer expects to apply for an occupation certificate. If that date changes, the developer must notify the Secretary within seven days of becoming aware of the change in circumstances.
What powers does the Secretary have under the Act?
The Secretary has sweeping powers under the Act to intervene in, and even stop, building work. The Secretary's long list of powers under the Act includes the ability to:
- prohibit the issuing of an occupation certificate in certain circumstances, including where they are satisfied that a serious defect exists or where insufficient notice was given under the Act
- issue a stop work order if the secretary is of the opinion that the building is, or is likely to be, carried out in a manner that could result in significant harm or loss or significant damage to the property
- issue a building work rectification order requiring a developer to eliminate or minimise a serious defect
- do anything necessary or convenient to give effect to the terms of a building work rectification order where a developer fails to comply, including carrying out works or destroying all or part of a building
- issue a developer with a compliance cost notice requiring the developer to pay reasonable costs and expenses incurred by the Secretary in connection with a building work rectification order.
The Act also gives the Secretary the power to appoint Authorised Officers who may:
- direct persons to hand over information and records, or answer questions, for an authorised purpose
- enter premises
- make necessary examinations, enquiries, measurements and tests
- where necessary to do so because of a serious defect or offence against the Act, seize items and demolish building work.
What are the penalties under the Act?
The penalties for non-compliance with the Act are severe. Penalties will apply for failing to comply with the expected completion notice provisions, failing to comply with stop work orders and building work rectification orders, and obstructing Authorised Officers or failing to comply with their directions.
For some offences, maximum penalties are as high as $495,660 for a body corporate and $165,200 for an individual, with penalties increasing from there by up to $49,566 (for body corporates) and $16,522 (for individuals) per day for each day an offence continues.
Notably, directors or persons "concerned in the management" of a body corporate may be personally liable for contraventions by that body corporate if they knowingly authorised or permitted the contravention.
Given the harsh penalties under the Act, it would be prudent for anyone who may fall within the Act's definition of a developer, to familiarise themselves with these obligations.
Need assistance navigating these changes?
Please contact Elon Zlotnick or Darcy Wilson.
All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.
