The Building Legislation Amendment Act 2023 (BLA Act) was passed by the NSW Parliament on 21 November 2023.
The BLA Act inter alia amends the Strata Schemes Management Act 2015 (NSW) (SSMA) such that the building bond amount of 2 per cent of the contract price will increase to 3 per cent. This was to apply to building bonds given on or after 1 February 2024 however on 19 January 2024 the NSW Government passed the Strata Schemes Management Amendment Regulation 2024 which amended the date for the increase from 1 February 2024 to 1 July 2024.
The increase to the prescribed building bond amount is explicitly designed to encourage the use of decennial liability insurance (DLI) rather than building bonds (i.e. the SSMA provides that a developer that obtains DLI is not required to obtain a building bond). DLI was introduced in November 2022 as a voluntary alternative option to building bonds.
DLI is an insurance in favour of an Owners Corporation against serious structural defects. It provides protection for a period of 10 years and is regarded by some as a better alternative to building bonds.
Unfortunately however, at present, there are limited insurers who offer DLI with Resilience Insurance being the first provider to offer coverage.
This is general information and should not be considered to be legal advice. You should obtain legal advice specific to your individual situation.
Author: Christopher Kerin
Posted: 15 May 2024