Mine subsidence certificates to be discontinued on 30 September 2019

Posted on Aug 25, 2019 by Jason Dunn   |   Categories: Building & Construction

On 30 September 2019 Subsidence Advisory NSW (formerly the Mine Subsidence Board) is discontinuing issuing certificates of compliance for properties under Section 15 of the former Mine Subsidence Compensation Act 1961 (“the 1961 Act”).

Currently what’s known as a 15B Certificate confirms that a property complies with Subsidence Advisory NSW’s requirements under the 1961 Act and is eligible for compensation for mine subsidence damage.

Following a comprehensive review in 2016, changes to the mine subsidence compensation system in NSW commenced on 1 January 2018 under the Coal Mine Subsidence Compensation Act 2017 (“the 2017 Act”) and certificates under section 15 of the 1961 Act have not been included in the 2017 Act.

According to Subsidence Advisory NSW the vast majority of developments in Mine Subsidence Districts are approved structures and in the last ten years only four claims for damaged homes have been refused due to the structure being non-compliant.

The review found the process for assessing whether a property complied with Subsidence Advisory NSW’s development requirements and was eligible for compensation was inadequate and the cost to properly complete the checks would exceed the cost of paying compensation claims each year, and would be prohibitive to purchasers.

While all structures in mine subsidence districts will continue to be eligible for compensation provided they have been constructed in accordance with the relevant approvals, purchasers will no longer be able to rely upon a relatively quick and inexpensive certificate to confirm eligibility for compensation.

It should be noted that prior to Councils granting development approval for properties in Mine Subsidence Districts, approval from Subsidence Advisory NSW is required.

From 30 September 2019 purchasers who wish to confirm whether a property is eligible for compensation will need to do so by obtaining confirmation of development approval from the vendor or Council. Alternatively, purchasers may wish to consider the option of purchasing title insurance with appropriate cover.

To the Government’s credit the new Act does contain provisions to protect purchasers who unknowingly purchase a non-complying structure. Subsidence Advisory NSW has discretion to pay a claim for subsidence damage despite non-compliance in circumstances where the failure to obtain the relevant approvals was not the fault of the property owner or where there are exceptional circumstances. This is however discretionary and subject to the property owner demonstrating that they exercised due diligence when seeking proof that the structure was approved.

While the logic behind the reforms has merit, it effectively shifts the risk and associated costs of confirming eligibility for compensation onto purchasers, who without good legal advice may find themselves ineligible for compensation for mine subsidence damage.