New protections for “Off the Plan” Purchases

New laws commenced on 1 September 2020 are designed to protect purchasers of off the plan apartments.

The New Residential Apartment Buildings (Compliance and Enforcement Powers) Act has commenced as part of the New South Wales Government’s objectives to have a better framework to protect consumers who have been wronged in the past by poor building practices.

Under the new Act a developer is required to notify the Secretary of the Department of Customer Service of when construction is expected to be completed and when an application for an Occupation Certificate is expected to be made.

That notice needs to be given not earlier than 12 months before the expected completion date and not less than 6 months before the expected completion date. Although the expected completion date can change the developer has to be careful in providing its estimate as in the event the actual completion date changes by more than 60 days then a further notice has to be issued to the Secretary.

The intention of providing the notice is to enable the Secretary a reasonable period prior to the completion of the building work to have the construction of the building examined and to detect and act on any serious building defects before an Occupation Certificate is issued.

As part of the overall reforms the definition of an Occupation Certificate under the Environmental Planning and Assessment Act has now been amended to remove Interim Occupation Certificates from the planning framework and Occupation Certificates now can only be issued for completed buildings or completed parts of buildings. Therefore, if the development is a staged project there could be multiple Occupation Certificates required to be issued and each one will have to be part of the notice framework.

The Act also gives the Secretary the power to prohibit the issue of an Occupation Certificate where a developer has failed to give the expected completion notice or does so outside of the required timeframe, the Secretary is satisfied that a serious defect in the building exists or a building bond required under the Strata laws has not been given to the Secretary. Such an order is known as a prohibition order.

Once a prohibition order has been issued the Secretary is required to give notice of that to the local council or the relevant certifier for the building work.

In addition to a prohibition order the Secretary also has the power to issue a stop work order where in the Secretary’s opinion the building work is or is likely to be carried out in a manner that could cause significant harm or loss to the public or occupiers or potential occupiers of the building or is likely to cause significant damage to the property.

Once an order has been made it remains in effect until the order is complied with, expires (if a date is specified) or is otherwise revoked by the Secretary or the Court.

The Act does allow for undertakings to be provided by a developer but only as an alternative to an order and not in satisfaction of an order that has already been given. This will then prevent a situation where if a prohibition order has been made the developer would not be able to give an undertaking to carry out the works but will actually have to carry out the works.

This new legislation is a welcome step in the right direction and enhances protections for purchasers of Off the Plan apartments.

Are you considering purchasing a property off the plan? To speak with one of our Commercial Law Team before you go ahead with the purchase please contact 8525 2700 or click here to request an appointment.

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