NK MehtaFor many off-the-plan buyers, settlement day is meant to be the finish line. However, serious Sydney apartment defects can stop that day from arriving at all. When the NSW building regulator uncovers major faults in a new development, buyers often find themselves stuck. They have paid deposits and made plans, yet they cannot move in, sell or walk away.
The latest case to make headlines follows a familiar pattern. Inspectors found serious defects, the project stalled, and buyers were left waiting for answers. Understanding how the process works can help buyers protect their money and their options.
How Serious Defects Stop a Sydney Development
Building Commission NSW has strong powers under the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020. The agency took over these functions from NSW Fair Trading from December 2023. It can inspect apartment buildings before completion and act when it finds serious problems.
The most powerful tool is the prohibition order. While this order is in force, an occupation certificate cannot be issued. In addition, the strata plan cannot be registered. In practice, this means the building legally cannot be lived in, and buyers’ contracts usually cannot move to settlement.
The regulator can also issue other orders:
- Stop work orders to halt unsafe or non-compliant construction
- Building work rectification orders requiring the developer to fix defects
- Enforceable undertakings, where a developer formally agrees to repair the work
What Counts as a Serious Defect in NSW?
Not every crack or chipped tile counts. Instead, the law focuses on faults in key building elements. These include problems that affect safety, structure or whether the home can be lived in. Failing to meet the Building Code of Australia can also qualify.
| Defect type | Common examples | Why it matters to buyers |
|---|---|---|
| Structural | Cracking in slabs, columns or transfer beams | Can affect the building’s long-term safety |
| Waterproofing | Leaking basements, balconies or bathrooms | Leads to mould, damage and costly repairs |
| Fire safety | Missing fire separation, faulty sprinklers | Puts residents’ lives at risk |
| Non-compliant cladding | Combustible facade materials | May require full replacement |
| Building services | Faulty drainage or ventilation | Affects day-to-day liveability |
Waterproofing and fire safety faults are among the most common issues in Sydney apartments. Because they are often hidden behind walls and floors, they can be expensive to fix after residents move in.
Why Buyers Are Left Waiting
A prohibition order protects buyers from settling on a faulty building. Even so, it brings a frustrating side effect: delay. Fixing major defects can take months or even years. Meanwhile, buyers face rising costs and uncertainty.
Many buyers are caught in a difficult position:
- Their deposits stay locked up with no clear end date
- Finance approvals can expire, so they may need to reapply
- Rent or temporary housing costs keep adding up
- Life plans, such as starting a family or downsizing, are put on hold
On top of this, developers can appeal a prohibition order in the Land and Environment Court. As a result, a dispute between the developer and the regulator can drag on while buyers simply wait.
Sunset Clauses and Your Rights as a Buyer
Most off-the-plan contracts include a sunset date. This is the deadline for the building to be completed and the strata plan registered. If that date passes, the contract can usually be ended and the buyer’s deposit returned.
Importantly, NSW law limits how developers can use sunset clauses. Since 2015, a developer generally needs the buyer’s consent or a Supreme Court order to cancel a contract under a sunset clause. This rule stops developers from cancelling deals only to resell units at a higher price.
For buyers, the next steps are fairly clear:
- Check your contract for the sunset date and any extension terms
- Speak with a property lawyer or conveyancer before agreeing to any changes
- Search the public register of building work orders for your development
- Keep written records of all updates from the developer
Are Sydney Apartment Defects Getting Better?
There is some encouraging news. A 2023 survey by Building Commission NSW and Strata Community Association NSW found that serious defects in newer buildings have been trending down since 2020. Waterproofing defects in particular have declined.
Even so, the same survey found that 53 per cent of strata buildings had experienced serious defects on common property. In other words, the problem has not gone away. Cases like this latest Sydney development show why buyers still need to do their homework before signing.
