Building defects in a new strata scheme — what to check in NSW

The short version

A defect is building work that hasn't been done properly — water getting in, cracking, failed waterproofing, dodgy fire safety, faulty common-property services. In a new strata scheme these problems tend to surface in the first couple of years, once the building has been lived in through a few seasons. NSW gives new-apartment buyers real protection here: statutory warranties, a building bond that funds an independent defect inspection, a developer's duty of care you can rely on, and a regulator that can hold up a building that isn't up to scratch. None of it means you should sign blind — it means you should read the building's early records and understand what you're covered for before you exchange.

Why new buildings still have defects

A freshly built apartment block is, in effect, a prototype. Waterproofing membranes, façade systems, balconies, basement tanking and fire-safety measures are all tested for the first time by real weather and real occupants. That's why the industry treats the first one to two years as the period when latent defects come to light. In a strata scheme those defects usually sit in the common property — the structure, the roof, the lifts, the shared plumbing — which the owners corporation, not you individually, is responsible for pursuing and repairing.

What protects you in NSW

Statutory warranties

Residential building work in NSW carries statutory warranties under the Home Building Act 1989. In broad terms, the builder warrants the work for six years for major defects (serious problems affecting structure, safety or habitability) and two years for other defects, running from completion. These warranties pass to later owners, so they can benefit you even though you didn't engage the builder yourself.

The strata building bond

For taller residential buildings — broadly those above three storeys, which fall outside home-building compensation insurance — Part 11 of the Strata Schemes Management Act 2015 (NSW) requires the developer to lodge a building bond of 2% of the building contract price. An independent building inspector then examines the completed building, producing an interim report and a final report in the first couple of years and identifying defects the developer is expected to fix. If they aren't fixed, the bond can be drawn on to pay for the work. It's a scheme designed to put money and an independent set of eyes behind the owners corporation.

A developer's and builder's duty of care

The Design and Building Practitioners Act 2020 (NSW) created a statutory duty of care owed by those who carry out construction work to avoid causing owners economic loss from defects. Importantly, that duty is owed to current and subsequent owners of the building, and it applies looking back over defects that emerged in the years before the Act as well as going forward — so it can reach buildings completed some time ago.

A regulator with teeth

NSW's building regulator can inspect new apartment buildings, order rectification work, and in serious cases hold up the occupation certificate a building needs before anyone can move in. That last power is one reason it's worth knowing whether your building already has its occupation certificate, especially in an off-the-plan purchase where settlement is triggered by it.

Finding out before you sign

Protections only help if the building is actually being repaired — a stalled or under-funded owners corporation can leave known defects unaddressed for years. The single most useful thing you can do is read the scheme's own paperwork. A strata records inspection will show whether the committee has commissioned a defects report, whether a building bond claim is on foot, and whether rectification is being funded — or quietly deferred. Because fixing defects costs money, a defect problem often shows up as a special levy that lands on whoever owns the lot when it's struck, which could be you.

What to check before you sign

1. Ask whether a defects inspection has been done. In a building past its first year, look for the building-bond inspector's interim or final report and read what it found.
2. Read the last two years of minutes for repair talk. Repeated mention of water ingress, cracking, façade or fire-safety work is a sign of live defects — even before a formal report exists.
3. Check the capital works fund can pay for repairs. A near-empty fund alongside known defects usually means a special levy is coming.
4. Confirm the building has its occupation certificate. No certificate can mean the regulator has concerns, or simply that the build isn't finished — either way, you want to know.
5. Note the building's age against the warranty periods. The closer you are to the two- and six-year marks, the more urgent it is that defects are raised before the cover runs out.

Common questions

Who actually chases the builder — me or the owners corporation?

For defects in common property, it's the owners corporation that pursues the builder or developer and organises repairs; individual owners fund it through their levies. Defects inside your own lot are more likely to be yours to raise. This is why the scheme's finances and appetite to act matter as much as the defect itself.

Does a defect give me a way out of the contract?

Not by itself. The warranties and the building bond are about getting defects fixed, not about unwinding your purchase. If a problem turns up after you've exchanged, your room to move is usually gone, which is exactly why the checks belong before you sign. For an off-the-plan purchase, our settlement and occupation certificates guide explains how the finished-building trigger works.

Is a new building safer than an older one?

Not necessarily — it's a different risk. An older scheme has a track record you can read; a new one is untested, but comes with fuller statutory protection and a live building bond. In both cases the answer is the same: read the records, and read the contract. Our off-the-plan NSW guide and the NSW contract review checklist pull the strata and building checks together with everything else worth looking at.