Have those Additions and Alterations to the Property been Approved?
You have put in an offer for a house and have been given all the information about the property by the agent. Or have you? Has that rumpus room been approved by council and does it comply with the building code. There is nothing detailed in the government searches and the agent hasn’t said anything so how do you know if it is approved and built correctly?
This is a common question asked by purchasers and in reality, not such an easy one to answer. The real estate agent should inform you of any information relating to additions and alterations that have been provided to them by the vendor. However the vendor may not even know the answer especially if they bought the property with the alterations already done.
Even if any alterations have been disclosed to you it is still important to check if they have been approved by council. Many properties will have had some form of renovation done such as a pergola, shed, verandah, swimming pool, or other building projects. It is a requirement to have the appropriate approval from council before constructing any of these. Most building approvals and continuing conditions will show up in the council search that is provided with the Form 1 or acquired by your conveyancer as part of the settlement process.
What if there is no approval noted in the council search?
It is quite common to find that the council search does not show the approval for the addition or alteration that you know has been done by the vendor. If this is known and has been disclosed to you prior to signing the contract then it would be wise to have the vendor obtain the appropriate approvals prior to settlement. Your conveyancer can recommend an appropriate clause to put in the contract to suit this. If it is discovered after the contract has been signed then it may mean you will be needing to renegotiate with the vendor as once the property has settled the risk will be all yours.
However often the vendor does not know whether the approvals were obtained as the addition was already there when they bought the property. To protect yourself as a purchaser, enquiries can be made at the council to find out if they have any records of the approvals. In some instances the council have records about approvals but because all the conditions have been satisfied, they have not included the information in their search. In other instances the approval may have been too long ago and the council records are lost or no longer available and of course there is also the possibility that the construction may not ever have been approved at all.
A swimming pool also needs to be compliant and this can be checked by a swimming pool inspector prior to settlement and a certificate can be provided by the vendor for this if required. It is in your best interests to make sure that this requirement is noted as a special condition in the contract.
A building inspection should also pick up whether any alterations or additions have been constructed to an appropriate standard. If this is done during the cooling off period then you can always cool off and not go ahead with the purchase or you could also renegotiate the purchase price to compensate for this. Just remember once settled anything not right or unapproved is your risk and your problem!
To protect your interest as a buyer where you do not know whether the construction was or was not approved you can take out insurance called Title Insurance which will cover this type of situation. Title Insurance is available for both unknown risks or known risks and covers other items such as boundary disputes, illegal or incorrectly built structures, fraud and other items. You can discuss this insurance with your conveyancer who can arrange for cover to be taken out if you wish. The insurance fee is a once off fee and will safeguard you for the lifetime of you owning the property.
Remember it is in your best interest to consult a conveyancer before you sign or at least in the cooling off period. That way any issues you are concerned about can be discussed and a contract can be amended or withdrawn during the cooling off period.
See: Title InsuranceBack