Legal Insights

Cladding Rectification Agreements: What does it mean for developers and builders?

By Branevan Shankumar

• 30 July 2018 • 1 min read

As part of the proposed changes, the Local Government Act 1989 will be amended to establish Cladding Rectification Agreements.

Last week, the Victorian Government introduced into Parliament the Building Amendment (Registration of Trades and other matters) Bill 2018. As part of the proposed changes, the Local Government Act 1989 will be amended to establish Cladding Rectification Agreements.

Upon recommendation by the Victorian Cladding Taskforce, the Andrews Government has introduced into parliament today as part of the Building Amendment (Registration of Trades and other matters) Bill 2018, a mechanism to reduce the cost of removing dangerous combustible cladding in Victorian residential buildings.

The mechanism, known as Cladding Rectification Agreements (CRAs), will be an agreement between owners (or owners corporations), lenders and local councils whereby owners are provided a long-term, low-interest loan to pay for the building work required to rectify the combustible cladding.

Under the CRA, the owners will pay the funds back through their council rates over a minimum period of 10 years with the CRA transferred to any subsequent purchaser of the property if it was sold during that period.

Developers and builders should be aware that these changes do not affect their liability.

The Bill is expected to be released to the public on Tuesday 7 August 2018.

Details of how the new regime will work will only be clear once the Bill is released, at which time we will update you once again.

Click here to read our article about what the CRAs mean for councils.

Need legal advice on combustible cladding issues?

Contact the Construction team.

By Branevan Shankumar

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