26 Jun Strata Building Defect Bond Scheme Deferred Until 2018
Strata Building Defect Bond Scheme Deferred Until 2018
NSW Fair Trading has officially deferred the building defect bond scheme. The scheme will now only apply to construction contracts signed (or where there is no contract and building work commences) from 1st of January 2018.
Fair Trading announced the delay was to ensure that all procedural and professional requirements supporting the scheme could be in place before commencement. This relates to the procedures surrounding the building inspections and processes to support bond lodgement.
The scheme applies to building work to construct residential or partially-residential strata properties that do not require coverage under Home Warranty (also known as Builders Warranty), i.e. those over three storeys in height. The aim is to promote efficient maintenance and monitoring of defects, as well as the prompt attention to defects by builders and developers to recover the bond amount. Developers will need to lodge a bond worth 2% of the building’s contract price with NSW Fair Trading.
Since 1999, CRM Brokers have been providing developers with an efficient and cost-effective way to satisfy financial guarantee requirements under contract through unsecured Surety Bonds.
Whilst complying with the new legislation, Surety Bonds provide the added advantages of;
Improving your balance sheet and liquidity
Unsecured; no tangible asset or collateral required
Works alongside your existing bank facilities
Risk mitigation; less-exposed to bank credit decisions or reviews
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