What is the Strata Building Bond and Inspection Scheme?
The NSW Strata Building Bond and Inspection Scheme (SBBIS) requires developers of new apartment buildings four or more storeys high to pay a 2% bond to NSW Fair Trading. This bond protects owners corporations from defective building work by ensuring funds are available to rectify any identified defects. A qualified strata inspector must inspect and approve work before the bond can be released.
How We Help Owners Corporations:
As qualified SBBIS inspectors registered with NSW Fair Trading, we conduct thorough interim and final inspections to identify defective building work. Our detailed reports document all defects with photographic evidence, ensuring developers are held accountable for rectification. We guide owners corporations through the entire process to protect their investment and ensure their building meets quality standards.
This scheme applies to NSW only. Buildings must be 4 or more storeys high.
8 Stages of the SBBIS Process
Understanding the complete Strata Building Bond and Inspection Scheme timeline
1
Building Bond Lodgement
The developer obtains and lodges a bond with NSW Fair Trading. The bond amount equals 2% of total contract prices and must be calculated before applying for an occupation certificate. Developers register projects in the NSW Planning Portal with street address, developer and builder contact details, building class/use/storeys/units, and supporting documents like contracts and warranties.
Key Requirements:
Bond amount equals 2% of contract price
Lodged before occupation certificate
Registration in NSW Planning Portal
Developer and builder contact details
Building class, use and storeys
Number of units documented
Supporting contracts provided
Warranties documentation
2
Inspector Appointment
The developer appoints a building inspector within 12 months of occupation certificate issuance, subject to owners' corporation approval. If not completed timely, Fair Trading arranges an appointment at the developer's expense. Within 28 days of appointment, the developer provides the inspector with documentation from Stage 1 plus information regarding identified defects or maintenance schedules.
Key Requirements:
Appointed within 12 months of OC
Subject to owners' corporation approval
Inspector must be independent
Selected from Fair Trading approved list
Documentation provided within 28 days
Defect information shared
Maintenance schedules provided
Fair Trading notified of appointment
3
Interim Inspection and Report
The building inspector conducts an on-site interim inspection between 15-18 months after occupation certificate issuance to identify defective building work. The inspector provides at least 14 days written notice for access. Defects are identified through visual inspections and non-destructive testing; specialist reports may supplement findings.
Key Requirements:
Conducted 15-18 months post-OC
14 days written notice for access
Visual inspection of all areas
Non-destructive testing methods
Specialist reports where needed
Electronic report via Strata Hub
Distributed to all relevant parties
Defects documented with photos
4
Rectifying Defective Building Work
The developer corrects defective work identified in the interim report, liaising with the original builder or arranging a replacement if unavailable. Rectification occurs between 18-24 months post-occupation certificate. Builders must provide at least 14 days written notice before accessing affected lots, and property owners cannot unreasonably refuse entry with proper notice.
Key Requirements:
Rectification 18-24 months post-OC
Developer coordinates with builder
14 days notice before access
Owners cannot unreasonably refuse
Original builder or replacement
All interim defects addressed
Work completed to standard
Access to affected lots arranged
5
Final Inspection Report
The same inspector who completed the interim report conducts the final inspection between 21-24 months after occupation certificate issuance, determining whether identified defects received rectification. If the original inspector is unavailable, written notice goes to Fair Trading within 14 days. The final report details remaining defective works and rectification approaches.
Key Requirements:
Conducted 21-24 months post-OC
Same inspector as interim
Verification of rectified defects
Identification of remaining issues
Electronic distribution of report
Rectification approaches detailed
Bond release recommendation
Fair Trading notification
6
Determining Cost to Rectify Defective Building Work
If the final report identifies defective building work, rectification costs must be determined. The developer and owners corporation can negotiate and submit a 'deed of agreement' with a cost proposal to Fair Trading within 30 days. If no agreement emerges, Fair Trading may require information reports or appoint a qualified person to assess rectification costs.
Key Requirements:
Negotiation between parties
Deed of agreement option
Submission within 30 days
Fair Trading assessment if needed
Qualified cost assessor appointed
Service fees shared equally
Cost claimed from bond
Dispute resolution available
7
Paying the Building Bond
Bond payment can occur 2 years post-completion with developer and owners corporation consent. If the interim report finds no defects and a waiver is approved, it becomes final and payment releases within 90 days to an approved issuer. When Stage 5 identifies defective work, payments come from the bond 2-3 years post-occupation certificate.
Key Requirements:
Release 2+ years post-completion
90 days release if no defects
Developer and OC consent required
Waiver option if no defects
14 days notice before payment
Full amount if costs exceed bond
Fair Trading manages release
Refusal if access was denied
8
Completion
The owners corporation uses received bond funds to rectify defective work identified in the final report within a reasonable timeframe and provides written completion notice. Any remaining funds are returned. The entire process should complete within 3 years, excluding defect rectification time, though variations and tribunal orders may extend this timeline.
Key Requirements:
OC rectifies remaining defects
Written completion notice
Remaining funds returned
Process completes within 3 years
Variations may extend timeline
Tribunal orders if disputes
Final documentation provided
Scheme obligations fulfilled
Benefits for Owners Corporations
Protection against defective building work
2% bond held by NSW Fair Trading
Independent qualified inspectors
Interim inspection at 15-18 months
Final inspection at 21-24 months
Detailed defect documentation
Developer accountability ensured
Funds available for rectification
Ensure your strata building is properly inspected - give the Owner Inspections Team a call today! 1300 471 805
Answers to common questions about the Strata Building Bond and Inspection Scheme
It is a scheme implemented by the NSW Government to protect homeowners from defects in new strata buildings. It involves a 2% bond of the contract price being held by the government to rectify any identified defects.
The developer of new residential and mixed-use high-rise strata buildings four storeys and above is required to lodge a building bond.
The building bond should be lodged by the developer before the occupation certificate is issued and any strata plan is registered.
The building inspector, who must be independent of the developer, is responsible for identifying any defects in the building. They provide an interim and a final inspection report.
The interim inspection should take place between 15 and 18 months after the occupation certificate is issued.
The final inspection occurs between 21 and 24 months after the occupation certificate is issued. It identifies any remaining defects not fixed since the interim report.
If the developer fails to lodge the building bond, penalties may apply, and the strata plan might not be registered.
If no defects are found in the building, the bond will be returned to the developer after the final report is issued.
The amount of the bond is equivalent to 2% of the contract price for the building work. It is paid by the developer to the Department of Fair Trading.
A building inspector must be selected from NSW Fair Trading's list of approved inspectors, and they must not have any connection with the developer.
If the cost of fixing defects exceeds the bond amount, the strata committee can consider options such as making a claim against the developer, the builder, or the developer's insurer.
No, the bond cannot be released until the final inspection and report have been completed.
Yes, a developer can dispute the findings of the inspector's report through the NSW Civil and Administrative Tribunal.
It is primarily the developer's responsibility to rectify the defects found in the building. The bond is there to ensure they fulfil this responsibility.
The scheme applies to new residential and mixed-use high-rise strata buildings that are four or more storeys high. Buildings of three storeys and below are covered under the Home Building Compensation scheme.
The cost varies depending on the size and complexity of the strata building. We provide customised quotes based on the number of units, common areas, and the scope of the inspection. Contact us for a tailored quote for your building.
The developer initially proposes an inspector, but the owners corporation has the right to approve or reject the appointment. The inspector must be selected from the NSW Fair Trading list of approved inspectors and must be independent of the developer.
If the developer fails to rectify defects identified in the interim report, these will be documented again in the final report. The cost of rectification can then be claimed from the 2% building bond held by NSW Fair Trading, ensuring funds are available for repairs.
Yes, the scheme covers defects in both common property areas and individual lots within the strata building. The inspector assesses all accessible areas including individual units, common areas, car parks, lobbies, and external elements of the building.
The duration depends on the size of the building. A small strata building may take one to two days, while larger buildings with many units and extensive common areas can take several days. We schedule inspections to minimise disruption to residents.
