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When Does Your Defects Liability End?

10/02/2020

What you need to know about On and Off Maintenance Securities.

Well done! Your approved development has been constructed and is now operational.  It is time to review your maintenance securities held by Council for development works and land infrastructure.

What happens to maintenance securities you have paid to Council?

Council retains these securities until “Off-maintenance” is achieved – this can take up to two years to complete.

What does it mean for you?

The development components such as civil works, landscaping, street-trees, remain your responsibility until the end of the maintenance period. In the event those works are required by conditions of a development approval you may have a continuing obligation to comply with those conditions during the period in which the approval is in effect.

For example, a development has been in operation for 5 years. An owner makes a complaint to Council regarding a stormwater drainage issue.  Because the developer is responsible for rectifying any matters associated with the infrastructure required by conditions of a development approval, Council can request the developer to undertake construction works to rectify any loss or damage to infrastructure during the maintenance period and in some circumstances after that period.

NOTE:  In addition to this liability, a developer may also owe a ‘duty of care’ to anyone who may incur injury or damage caused by faulty infrastructure or works it constructed or was responsible for.

What happens if the Developer does not undertake works requested by Council?

Council may, for example:

  • Take enforcement action against the owner or occupier of the land responsible for the works;
  • Sue the person responsible for breach of contract in respect of any agreements requiring the works;
  • Call on the security provided (if any) to cover the costs of completing the work itself.

What happens after the “On-maintenance” period expires (generally 12-24 months)?

It is your responsibility as the developer to request Council to attend an ‘Off-maintenance’ inspection.

This is a critical step in ensuring that:

  1. Liability for the infrastructure/assets is transferred to Council; and
  2. Your security/bond is released

Local Authorities are holding millions of dollars in unclaimed maintenance security charges.

It is recommended a request for ‘Off-maintenance’ be pursued as soon as the Maintenance period has ended.

If you believe you have securities held by a Local Authority our Delivery team can assist by:

  1. Monitoring your “On-maintenance”/ “Off-maintenance” processes
  2. Co-ordinating your “Off-maintenance” inspection with Council
  3. Facilitating the return of all securities after “Off-maintenance is achieved

Get in touch today, don’t risk it!

Phone: (07) 3666 5200

Email: wkingi@wolterconsulting.com.au

Contributors: Patrick Day, MacDonnells Law and Wolter Consulting Group Project Delivery Team.

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