Buying Property with Unauthorised Work.
Daniel and Angela finally saved up enough funds to purchase their first investment property. They looked at several properties and each was offered for sale by auction so they sent the auction documents to their solicitor for advice.
After being unsuccessful at auction several times, they found another property where the auction had been brought forward. Given the short time-frame and the fact they had now seen plenty of auction documents, they decided to look at the documents themselves. After looking through the auction documents there did not appear to be any issues.
Daniel and Angela were delighted to become the successful bidders. The agreement was sent to their solicitors for processing. The next day Angela received a call from their solicitor about a clause in the agreement stating that they acknowledged that the vendor had built a deck on the property which did not have any code compliance certificate (CCC), and that they would have no claim against the vendor under the vendor warranties.
Daniel and Angela had not noticed the clause but vaguely recalled that the auctioneer had mentioned something about it when the auction started. The deck was four metres off the ground, but the house was perfect for them and they believed that they had made a good choice. Daniel and Angela were not overly concerned about the lack of CCC and said that they would probably obtain CCC before eventually selling the property in a few years.
Shortly after settlement, Daniel and Angela were told about a case where landlords were fined $4,500 plus $130 court costs because a non-compliant deck on their rental property had collapsed requiring several people to receive hospital treatment.
Given the height of the deck Daniel and Angela decided to seek a CCC for the deck immediately, even though they considered the risk of such a disaster on the deck was small.
Properties are often sold after unauthorised works have been carried out. The problem is often not identified in the LIM report. Where work was carried out by a previous owner the current owner has no liability under the vendor warranties. Beware of purchasing any property with unauthorised work or with work for which there is no final CCC. A mishap arising from the non-compliant work could negate your insurance cover and, if you plan to put tenants into the property, might involve serious liability to you as the landlord.
If you feel you could use some specialist advice, don’t hesitate to contact the Property Team.
