Developer to pay $3 million to guarantee apartment rectification
Australian YMCI will lodge a $3 million security with the NSW government to guarantee the rectification work the developer will complete on a 326-unit apartment development in western Sydney’s Lidcombe.
The security lodged with the Secretary of the NSW Fair Trading department will be returned to the developer gradually over the six-year statutory warranty period, under a so-called enforceable undertaking AYMCI proposed and apartment owners voted to accept on Wednesday.
The undertaking is one of a number of remedies created under building industry-reforming legislation passed in 2020.
Wednesday’s successful vote allows for rectification of defects including faulty waterproofing in a way that is acceptable to apartment owners and permits the stepped return of the security to AYMCI – such as $1.5 million back after three years – subject to compliance with the agreement.
For the developer, the vote means it can market the next stage of its $5 billion Ovation Quarter development without the cloud of unresolved defects hanging over buildings that are partially sold and occupied.
“We are extremely pleased that we finally have the owners corporation fully on board by signing the deed,” said AYMCI director Jason Tan, calling it a “turning point” for the construction industry.
“What people do not realise is this process allows us to work together with the owners corporation and answer questions that owners want to ask in an open forum.
“We can come to a resolution and move forward without any time and money wasted on litigation. This allows owners to feel at ease with the team engaged that will fix defects to a high standard every step of the way.”
The owners corporation declined to comment.
The process set up under Building Commissioner David Chandler had led to a very positive outcome for the AYMCI project, said Steve Mann, NSW chief executive of the Urban Development Institute of Australia developer body.
“There has been no pathway forward for some time,” Mr Mann said on Thursday.
“Without strong leadership from the commissioner we’re not getting there on some of these projects. This will be an example of a good process.”
The security, derived from the value of the work, was necessary, Mr Mann said.
“It’s not a lot of fun for developers but the message is don’t get there in the first place.”
AYMCI, is planning 3500 apartments in total for the Sydney Olympic Park site.
The Ovation Quarter agreement was not the first enforceable undertaking, but the first of its type and would set an example, Mr Mann said.
“I think it’s the first time in this mix of circumstances where you’ve got apartment owners in place already and there’s this willingness from the developer to complete works and for the building commissioner to be alongside it,” he said.
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