Defects liability, the building bond and what happens at practical completion
What happens after an apartment building is handed over?
Practical completion is the point at which a building is complete apart from minor defects and the developer can take possession, and it starts three separate clocks that a developer should keep apart. The contractual defects liability period, set in the building contract, is the period during which the builder returns to rectify defects notified by the developer, usually with a joint inspection at the end. The statutory warranties under the Home Building Act run for six years for major defects and two years for other defects from completion, regardless of what the contract says, and pass to purchasers and the owners corporation. And for residential buildings of four or more storeys, the strata building bond scheme requires the developer to lodge a bond and appoint an independent inspector, whose reports after completion decide how much of the bond is released and how much pays for defects. A developer should know all three before the occupation certificate issues.
The contractual defects period
Runs from practical completion for the period in the contract. The developer notifies defects, the builder rectifies them, and a final inspection closes the period. Retention or security held under the contract is released against it.
The statutory warranties
Set by the Home Building Act, currently six years for major defects and two years for other defects, running from completion. They cannot be contracted out of and they pass to subsequent owners, which is why they matter to purchasers and to the owners corporation.
The strata building bond
Applies to residential strata buildings of four or more storeys. The developer lodges a bond calculated as a percentage of the contract price and appoints an independent building inspector. The inspector's reports after completion determine what is rectified and how much of the bond is returned. Check the current percentage and inspection timing with NSW Fair Trading.
Practical completion itself
The occupation certificate, the handover documentation, the as-built drawings, the warranties and manuals, and the strata plan registration usually run in the same weeks. A builder who has done it before has a checklist; ask to see it.
Reviewed September 2026. Regulatory settings in New South Wales change; confirm the current requirements with your certifier and solicitor.
Related questions
Who inspects for the bond?
An independent building inspector appointed by the developer, who must not have a connection to the builder or the developer. The inspector reports to NSW Fair Trading.
Do the statutory warranties apply to the commercial part of a mixed-use building?
The Home Building Act warranties apply to residential building work. Commercial fit-out is governed by the contract.
What if a defect appears after the contractual period?
The statutory warranties still apply within their periods. Regulatory settings change; confirm the current periods and bond requirements with your solicitor.
Discuss a site.
Send the address and the stage the project has reached. A director reads every enquiry and replies within one business day.