Land Development Engineering

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  • 1.  Defects Liability Bonds

    Posted 30-05-2017 10:25
    Hi everyone

    I was wondering what Councils out there are doing in the way defects liability bonds?

    Currently our Council does not impose a defects bond on subdivision consents and we are coming up against issues were we have no teeth at the end of the defects period to get things remediated. The titles have been issued and the developer doesn't care.

    What experience does everyone have with this? Do you not have a bond, do you charge a bond that is a percentage of the vested assets value or do you have a set value that you charge?

    Clare Hamilton
    Development Engineer
    Selwyn District Council

  • 2.  RE: Defects Liability Bonds

    Posted 31-05-2017 10:36
    Edited by Samantha Brown 01-06-2017 10:18
    Hi Clare,

    We impose a defect liability bond which has to be lodged prior to plan sealing.

    The bond is 5% of the cost of the assets (minimum $5000) which is held for a minimum of 12 months and released upon a successful inspection of the assets at this time.


    Samantha Brown
    Assessment Engineer
    Redland City Council


  • 3.  RE: Defects Liability Bonds

    Posted 31-05-2017 10:58
    Where defects are identified prior to the issuing of titles then we do insist upon performance bonds from the developer.

    However if the works pass all the engineering checks prior to issuing of titles it is not common practice for us to retain a performance bond. Our developers are generally well known to Council and are not normally one off developers so we have not had an issue getting remedial works completed.

    Damien Wood
    Development Engineer
    Whanganui District Council


  • 4.  RE: Defects Liability Bonds

    Posted 31-05-2017 10:59

    Hello Clare,


    My Council (and most Tassie Councils) hold a bond of 5% of the total cost of the development works if Council is to take over the works at the end of the defects period. We may not take it if it is small and pipe works only, but certainly would for any road works & major pipe works/pits to be taken over by Council.


    The bond is paid by the developer and is a condition of approval placed on the Permit. The bond is returned after a successful Final Inspection at the end of the defects period.


    If the developer wishes to have early issue of title, we basically say that the works have to be 75% to 80% complete and take a bond of 100% of the outstanding works (including as constructed survey, POS contribution, etc) times 1.5 to allow for Council costs if the developer "runs away" for any reason. They have only six months to complete works. Once PC has been reached, we will reduce bond to 5% as per above.


    Hope this is helpful.


    Leon Ashlin

    Engineering Manager - Projects & Development

    47 Cole Street, P.O. Box 126, Sorell, TAS, 7172

    T: 03 6269 0025   |   F: 03 6269 0014   |   M: 0417 051 736




  • 5.  RE: Defects Liability Bonds

    Posted 01-06-2017 09:18
    Hi Clare,

    If the works are complete and certified by an RPEQ, then it is good practice for the Local Authority to hold a 5% defects bond for a twelve month period, the bond would be taken after the on defects inspections and prior to the release of the survey plan.

    Once the defects period is over a final inspection would be conducted with any defects noted and subsequently rectified by the developer or the contractor prior to the release of the bond.

    If you would like to reference our regions development manual you can review the document at Capricorn Municipal Development Guidelines Home Page
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    Capricorn Municipal Development Guidelines Home Page
    This site is intended to provide a location for the display of engineering drawings and specifications which are approved by Local Governments in the Southern and Central Queensland area. The participating local governments in the project are: Banana Shire Council, Central Highlands Regional Council, Gladstone Regional Council, Isaac Regional Council, Livingstone Shire Council, Maranoa Regional Council and Rockhampton Regional Council.
    View this on Cmdg >

    Adam Doherty
    Dileigh Consulting Engineers


  • 6.  RE: Defects Liability Bonds

    Posted 01-06-2017 09:18
    Hi Clare,

    Agreed we have a hard time getting developers to come back to rectify issues without an adequate cash bond.

    Port Macquarie Hastings Council (regional NSW) holds 10% (or a minimum $2000) of the total value of all public assets within the subdivision release(as declared by the developer and spot checked by the Development Engineer) for the duration of the Defects Liability Period (DLP) which is 12 months. A partial draw down to half (5%) is allowed after the first 3 months if no issues are raised on interim reinspection.

    The same question was in the last year or so asked among some NSW Development Engineers and from recollection several responses ranged from 5 to 10% of asset value and 6 to 12 month DLP duration.

    Would be interested in other responses.

    Kind regards

    Bevan Crofts
    Development Engineer
    Port Macquarie-Hastings Council
    PO Box 84
    Mob: 0409 686 507
    Voicemail: (02) 6581 8050
    Fax: (02) 6581 8123


  • 7.  RE: Defects Liability Bonds

    Posted 02-06-2017 10:32
    HI Clare,

    I see this is a sensitive topic with many good ideas coming out of the woodwork. In my experience there are very few times that a defects liability bond is enforced to ensure substandard works are remediated and I have signed off over 2000 development consents in the past 20 years. Developers want to keep a good relationship with Councils. For a start the conditions of consent must include a defects liability clause to cover work that does not perform to specification and as others have said is generally 5% of the total cost including administration. Refer NZS3910 for definitions. A defects consent condition with no monetary penalty is worthless. The Defects liability bond is not to be confused with uncompleted works (e.g. landscape planting maintenance) because the defects bond is covering works already completed and passed inspection. For works that have failed over time and repaired by the developer's contractor, the defects period must start over again. This can get difficult as the value when large may lead to a legal solution and when small may be below your Council's threshold bond value. The defects liability must also cover design for example under sized pipelines or lack of pavement depth although this is harder to prove. In this case the developer may seek a solution from their consultant when pursued by Council.

    Bevan Mullions
    Land Development Engineer
    Green Mullions Ltd  021 133 4566