› Flat Chat Strata Forum › From the Front Page › Crumbling blocks and cladding – it’s time for payback › Current Page
How’s this for a suggestion? When we bought our unit, we had a choice of handing over a deposit of $73,000 (which could have disappeared if the builder went broke) or buying a Deposit Bond for $3,000. If you know how these work, skip the next paragraph.
Deposit Bonds replace putting up a deposit for real estate. The Deposit Bond company puts up the money for you, for which you pay them a non-refundable fee of a few thousand dollars. When you settle, they get their money back. If you default, however (if you can’t raise the purchase price, say) they lose their money – and they come looking for you to pay them.
The same basic system could be used to guarantee against faulty construction. Instead of the builder setting aside 2% of the build, he or she could pay a relatively small amount for a bond equivalent to, say 8% of the build. The bond issuer would have to pay for rectification work, and would then pursue the builder for compensation. Bond-issuing companies have the dollars and the legal muscle to get their money back.