Macquarie Park apartment sales under investigation following rectification order

The news

NSW Fair Trading will launch an investigation into sales in the Lachlan Line’s apartment complex at Macquarie Park after a rectification order for serious defects was issued on Wednesday, as the Minns government says it will use strengthened powers to stamp out wrongdoing.

Any finding of failing to disclose knowledge of the serious defect in the building’s concrete slab could result in a maximum penalty of $22,000, with questions raised after claims one new owner was unaware of the problems despite the rectification order noting the owners corporation and local council were informed last October.

As Fair Trading confirmed the probe into the sales advertisements and contracts, a NSW government spokesman said: “The government won’t hesitate to use its powers and hold those that fail to disclose defects to account.”

On Wednesday, property developer Greenland Australia, the developer of 23 Halifax Street, was issued with an urgent rectification order for “serious damage” to the concrete in the basement. The rectification order, issued by the Building Commission NSW after an audit of the four blocks of 900 new apartments in Sydney’s north, warned of “serious damage and spalling of the concrete slab at the joint locations in basements and the ground floor”.

Despite the rectification order stating that “this is a defect in a building product or building element that causes or is likely to cause the basement slab to fail, namely, to fracture and collapse, leading to the destruction of the building or any part, or the threat of collapse of the building or any part”, a later statement from the commission said the building was not at risk of imminent collapse. The risk was confined to the “long-term durability” of the basement levels, rather than any units within the complex, it said.

Owners were unimpressed. One recent buyer, Nina Bishop, who was moving the last of her packing boxes into the complex when the news broke, said she was blindsided by the defects. The strata report had not mentioned anything of the sort, she told reporters.

In response, a spokesman for Fair Trading Minister Anoulack Chanthivong said: “The public should expect to see more historical poor work called out as Building Commission NSW continues to ramp up, and we’ll be working to make sure people can make informed decisions about the property they buy.”

Greenland Australia said it would comply with the orders which require full rectification within eight months.

Ten rectification orders have been issued already this year.

How we got here

Sydney’s modern history of apartment building has been chequered. Both the Mascot Towers and Opal Tower have plagued unfortunate owners after widespread cracks were discovered in the respective buildings.

In 2020, the previous Coalition government strengthened existing legislation to protect people who purchase apartments from developers through the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020, and the Design and Building Practitioners Act 2020.

The former imposes a statutory duty of care for those involved in the construction of buildings and will enable owners and purchasers to sue if that duty is breached, while the latter empowered Building Commissioner David Chandler to inspect work sites to ensure quality work.

Issues remain. Last year, the Department of Planning and Environment hit the owners’ corporation of One Central Park in Broadway with the bill for remediation of flammable cladding. The dispute has ended up in both the Supreme Court and the Land and Environment Court.

The new plan

The Minns Labor government has introduced a suite of reforms to address the state’s acute housing shortage. Increasing density through the construction of apartments around transport hubs will be vital to Housing Minister Paul Scully’s plans to meet ambitious national targets.

As the government races to build 378,000 homes by July 2029, the problem will be ensuring quality.

On Thursday, Chandler warned he considered up to 20 per cent of developers in NSW as “risky”. His powers have been broadened to consider stand-alone homes, and his standards enforcement team increased from 40 staff to over 400.

One of the sites marked for a dramatic uplift in density? Macquarie Park. In November, Premier Chris Minns announced his government would facilitate the construction of 8000 new homes, mostly apartments, in the suburb.

What they said

Building Commissioner David Chandler: “When I started this exercise in 2019, I said that 15 to 20 per cent of developers were risky. That’s proving to be the case as we work our way out of this.”

Planning Minister Paul Scully: “I think the government’s happy with the optics of the building commissioner out being the tough cop on the beat that we expected him to be. Over the last few years there’s no doubt there’s been some confidence issues creep into the built environment.”

Unit owner Nina Bishop had just finished moving into the Macquarie Park apartment complex.Credit: Nine News

Lachlan’s Line apartment owner Nina Bishop: “It’s nerve-racking wondering what’s going on. It’s out of the blue.”

What you need to know

Apartment buildings have a six-year warranty, and a 10-year “long-stop” which protects owners from dodgy builders or developers. Chandler can pursue developers for rectification orders if serious defects are identified and reported early enough.

Real estate agents are obligated to inform potential buyers of serious defects in apartment complexes. Any serious issues identified by the Building Commission will be first handed to the building’s owners corporations as draft orders before being published on the agency’s website.

NSW Building Commissioner David Chandler.Credit: Kate Gerathy

Does a selling or leasing agent have an obligation to disclose a building defect? At what point in the process?

If there is a formal order issued by the Building Commission under legislation regarding a building defect then it is a material fact that an agent is required to disclose.

Where there are defects, but no order, these may not be known by a selling or leasing agent.

Does an owner’s corporation have an obligation to disclose a defect in its reports? At what stage of the process?

Anyone looking to purchase into a strata building should research strata records and reports. This usually occurs as a part of the sale and settlement process.

Any defects in the building that have been subject of strata decisions are likely to be in the owners corporation’s records and would become known as part of the strata records search.

Does a council have an obligation to disclose a building with a defect? At what point in the process?

If a council has issued orders related to a defect, those defects should be discoverable as part of the conveyancing of a building.

What recourse does a buyer have if a defect is not disclosed?

Potential recourse for a buyer who discovers an undisclosed defect in their building depends on whom the buyer considers should have disclosed the defect, and the other party’s obligations.

Buyers should then seek advice on what legal recourse is available to them.

What steps should a buyer/tenant take if a defect is discovered after they purchase/sign a lease?

Owners can contact Building Commission NSW if they have concerns about potentially defective building work. Renters should contact their property’s owner in the first instance and NSW Fair Trading if the matter cannot be resolved.

Further reading

Dodgy developers’ days are numbered, says building commissioner

‘Most risky’ certifiers of NSW apartment buildings in watchdog’s sights

Bad developers have left a trail of misery, but our reforms are cleaning them out

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