Developers and owners corporations are increasingly navigating two overlapping concepts, decennial liability insurance, often referred to as DLI, and the strata building bond and inspections scheme.
While both are designed to address building defects, they do so in fundamentally different ways and over very different time frames. In practice, this distinction often becomes less clear after handover, when stakeholders begin relying on these frameworks to manage defects.
At this point, differences in how and when each mechanism applies can lead to diverging expectations. For developers, this can lead to difficult conversations with committees and owners. For committees, it can create uncertainty around what is covered, when it applies, and who is responsible.
Early engagement with the inspection process can help reduce reliance on the bond and support faster resolution of identified defects.
While the building bond focuses on early-stage defect resolution, DLI takes a longer-term, insurance-based approach to defect risk. This is where the distinction between the two frameworks becomes more pronounced.
According to the NSW Government, DLI is being explored as a model that could cover serious defects in critical building elements for up to 10 years from first occupation.
There are several key differences compared to the building bond:
It is typically not until responsibility begins to shift that these differences become more apparent in practice. This often occurs after the first AGM, when committees begin engaging directly with building issues and misunderstandings become more visible.
These gaps are rarely about the frameworks themselves. More often, they reflect how they are introduced, explained, and understood during the handover process.
To illustrate how this can play out, consider a newly completed apartment building entering its second year after occupation.
During the interim inspection period, several waterproofing defects have been identified. Some have been addressed, while others are still being monitored. At the same time, the owners corporation begins noticing minor issues such as cracking and general wear in common areas.
From the committee’s perspective, there may be an expectation that all these concerns fall under the same form of protection. Questions often arise about whether the building bond should be used or whether a longer-term mechanism, such as DLI, should be used instead.
From the developer’s perspective, the situation is more defined. The building bond process is still active, tied to the inspection timeline and focused on specific identified defects. Any future mechanism, such as DLI (if in place), would relate to serious defects in critical elements rather than general building concerns.
Without a clear explanation of these boundaries, both parties may feel they are approaching the situation correctly, while still working from different assumptions.
Providing a simple, scenario-based explanation like this before or at the first AGM can help align expectations early and reduce the likelihood of disputes later.
Early, clear communication can significantly reduce the risk of disputes later. Addressing these gaps upfront can make a meaningful difference to how defect management unfolds after handover.
Before the first AGM, it can help to clearly outline:
It is equally important to explain what sits outside these frameworks:
Framing these concepts in practical terms, rather than legal or regulatory language, can make a meaningful difference in how they are understood.
At PICA Group, our developer services go beyond legislative compliance. Each quarter, we support new communities through practical, on‑the‑ground engagement, including:
These touchpoints help reduce early confusion, improve owner confidence, and support smoother transitions from development to community living.
With more than 185,000 lots under management, PICA Group’s specialist property developer services team provide practical guidance based on best practice expertise.
Understanding the difference between the strata building bond and DLI is becoming increasingly important as defect management frameworks evolve. While both relate to building defects, they operate across different timeframes and serve different purposes: the bond focuses on early identification and rectification, while DLI explores longer-term protection for serious issues.
Ultimately, the challenge is not just understanding these frameworks but helping them be communicated clearly at the right time. For developers, the opportunity lies in setting clear expectations early. When these frameworks are explained in a practical and accessible way, they can support a smoother handover and reduce the likelihood of disputes as buildings transition to owners corporations.
This article is edited by Lauren Shaw Regional General Manager and Licensee-in-Charge on June 2026.
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