It is important when buying or selling a property to check that all structures requiring development consent are approved by the relevant government authority, usually your local Council.
Quite often home buyers will purchase a property unaware that certain structures on it required Council approval and that it has not been obtained.
In contracts for sale of land in NSW, legislation[1] requires a vendor to warrant (promise) that except as disclosed in the contract there is no matter in relation to any building or structure on the land that would justify the making of a demolition or upgrading order. This provides some comfort for purchasers. However, the practicalities of recovering damages from the vendor in circumstances where it becomes apparent after settlement that there has been a breach of the implied statutory warranty mean that it is really a “Buyer Beware” situation for purchasers.
State planning laws allow for certain types of development, known as “exempt or complying development”[2], to be undertaken without the need for Council approval. All other works require approval, including any new dwelling, extension, conversion of a structure or part of a structure (such as an attic or basement) for residential purposes and some other home renovations (for example, a deck extension).
If you are a property owner undertaking renovation work and have any doubt as to whether you require development approval, we recommend that you speak with your lawyer and / or your local Council planning officer in consultation with your builder.
For Purchasers
When we act for a purchaser of land on which a dwelling or other significant structural improvement is located, we will always request the vendor’s legal representative to provide records of required Council approvals. If the vendor does not hold records, and if your pre purchase building inspection report indicates building work has been undertaken on the land requiring approval, we recommend enquiring directly with Council whether all required approvals are in place. We can organise an inspection of the Council file via an open access application under the Government Information (Public Access) Act 2009 (Cth). These applications can take up to 21 days to process, so it is important to get the application underway early if you want to go down this path.
If an inspection of the Council file for the property indicates that there are structures that are not approved, it may be possible to require the vendor to provide a Building Certificate or you may decide to do so yourself if the vendor does not agree. Whether the vendor will agree to obtain the certificate at their own cost will depend on their level of motivation to sell the property to you. For instance, if there are other interested parties who may be prepared to proceed without evidence of Council approval the vendor is unlikely to agree to such a request.
A Building Certificate is a certificate issued by Council, who, after attending the property to inspect the physical structures on the land, can issue a certificate confirming all structures are satisfactory to the Council, or if the structures are not compliant, issues a work order requiring work to be done to remedy any non-compliant structures.
A survey report is required to be provided to Council to obtain a Building Certificate. The costs associated with obtaining a survey report and a Building Certificate for a standard residential property are likely to be in the vicinity of $1,000. We will generally recommend that you obtain the documents, but it is your decision as to whether the cost is justified in comparison to the potential problems which may arise in buying the property with unapproved structures. There may be no consequences at all, however the potential issues are:
- Costly rectification works as a result of an upgrading, demolition or work order issued by Council; or
- Difficulties trying to sell the property if subsequent buyers decide to carry out survey reports and obtain a Building Certificate.
For Vendors
If you find yourself as a vendor in a situation where you are unable to sell your property because an unapproved structure, you may need to go through the process of obtaining a Building Certificate as outlined above. It may be possible to exchange contracts with a purchaser (securing a conditional sale) on the basis that settlement is subject to you providing the certificate.
If you are aware of an unapproved structure on your land which you are selling, you should let your legal representative know when you first provide them with instructions.
For more information or a fixed price quote for your sale or purchase, please contact KS Law.
The content of this article is intended to provide a general guide to the subject matter. Specialist individual advice should be sought about your specific circumstances.
[1] Section 52 Conveyancing Act 191 (NSW) & Conveyancing (Sale of Land) Regulation 2010 (NSW)
[2] Environmental Planning and Assessment Act 1979 (NSW) ; Local Environmental Plans and the State Environmental Planning Policy (Exempt and Complying Development Codes 2008 (NSW)
