It’s time we stopped calling everything a defect

From 1 October, developer licensing becomes mandatory in the ACT. There’s plenty of debate about whether it will achieve what it sets out to do, and I share some of that scepticism. But I think the licensing scheme gives us a rare chance to fix something that has quietly poisoned the relationship between owners corporations and builder/developers for years: the word “defect.”

In our industry, “defect” is contagious. Once it enters the conversation, everyone reaches for their lawyer. A missing door closer, a paint touch-up and a failed waterproofing membrane all end up on the same list under the same heading. The word implies fault, liability and blame. So the builder goes defensive, the committee goes adversarial, and a list of 200 items that could have been closed out in six weeks turns into a two-year standoff. The genuinely serious issues get buried among the trivial ones.

Different words, different behaviours

Other jurisdictions with longer histories handle this differently, starting with the language. In the UK and Ireland, the period after practical completion is about “snagging.” A snag list is expected, normal and routine. It’s part of finishing a building, not proof that someone failed. France separates the handover “reserves” from the long-tail structural guarantees. Different words for different problems create different behaviours.

In the 15 years I’ve been in Canberra, handover has improved enormously. Fifteen years ago, the builder/developer handed over the keys and walked away. Owners corporations inherited buildings with no documentation, no warranties and no one to call. On the next development we’re taking on in Woden, the developer has engaged an independent building consultant to start the common area review before the plan is even registered. That’s a completely different starting point, and it deserves recognition.

The scaffolding already exists

The legislative scaffolding for a better process already exists. We just don’t use it well.

Under the Unit Titles (Management) Act 2011, the developer must prepare a maintenance schedule for the common property (s25), covering the inspection and maintenance of systems, equipment and structures along with their warranties. It must be handed to the owners corporation at the first AGM, which has to be held within three months of registration (Schedule 3, cl 3.3–3.4), together with the plans, specifications and approvals. The owners corporation must then prepare its own maintenance plan that takes the developer’s schedule into account (s24).

The Act also says the developer’s schedule can be considered in legal proceedings when deciding whether a defect could have been avoided by maintenance. Yet it doesn’t reduce the developer’s obligations for structural defects or warranties.

In other words, the maintenance schedule is the exact point where “defect” and “maintenance” meet. Too often it’s a generic document dumped in a box at the first AGM, then pulled out years later as a weapon: “you didn’t maintain it, so it’s not our problem.” It should be the opposite: a shared, working document both parties sign up to from day one.

What best practice could look like

So here is what I think best practice could look like, without anyone needing to be litigious straight away:

• Joint pre-registration inspection. An independent consultant, briefed by the developer with the incoming strata manager involved, reviews the common areas before registration.
• A real handover at the first AGM. The maintenance schedule, as-builts and warranties are walked through with the committee, not just delivered.
• A shared close-out register for the first 12 months. Every item is logged and triaged: snag or incomplete work, maintenance, defect, or serious defect. Each category gets its own response time and owner.
• An owners corporation maintenance plan adopted early, built on the developer’s schedule, so the building’s upkeep is documented from the start. That protects owners and developers alike.
• A clear escalation ladder. Register, then joint site meeting, then independent expert determination, and only then the regulator, insurance or the courts.

Licensing puts developers directly into the chain of responsibility, and the last-minute push toward latent defect insurance may give owners a “first resort” path for the serious stuff. Neither will change behaviour on the ground unless we change how the first 12 months are run. That includes the words we use.

Snags are normal. Defects are serious. If we stop treating them as the same thing, we might find most buildings can be closed out with a spreadsheet and a site meeting rather than a statement of claim.