I was recently tasked with writing a few blog articles for the firm I'm currently working with and I thought I'd share one with you here. The following is an article that contains some advice for buyers purchasing a house that may have alterations that were not approved by council. 


The old saying of ‘buyer beware’ still rings true when purchasing a house in Queensland, especially when it comes to unapproved alterations or extensions to a property. When you’re considering buying a house it is important to be aware of where the risks and responsibilities of the purchase process lie at given times, as they often shift as the process moves forward. Unapproved alterations and extensions to a property are one these shifting responsibilities.

Prior to signing the contract for purchase it is the responsibility of the seller to ensure that any alterations to the property have the required council approval. Once you sign the contract though the responsibility for these approvals shifts to you; the buyer. If no notice has been issued by the council in relation to the work, then unfortunately there is no requirement that the seller comply with the required approvals prior to entering into the contract.

You may think that this issue falls under the pest and building inspection report clause and you will be able to terminate the contract on these grounds, however this is not the case in Queensland as these reports are limited to looking at the structural integrity of the house and not whether it has the required council approvals. The Queensland government does not legally oblige home sellers to disclose material information such as this to a buyer.

Former Queensland Fair Trading Minister Peter Lawlor described the situation as follows:

“While a real estate agent needs to verify the material facts when selling a property and encourage the seller to disclose all information, there is no obligation or legal requirement for the agent or seller to conduct building and pest inspections, or conduct council approval surveys prior to listing a property for sale.”

As an example a relevant case that went to court involved a carport that had being built by the seller of a house in contravention of building by laws. The buyers only discovered this after signing the contract and soon learned that it was likely the council would require the demolishment of the carport and no alternative covered vehicle accommodation could legally be constructed on the property. The buyers attempted to terminate the contract on these grounds, however the court found that this did not constitute grounds for termination of the contract.[1]

While standard practice in a transaction is to conduct a building and pest inspection as part of the purchase process, a council approval survey is not part of the standard process. A contract can only be terminated where a notice has been issued prior to the signing of the contract. So unless the council has previously issued a notice to the seller about the alteration, then they are under no obligation to make any disclosure. Hence the term ‘buyer beware’. If a notice has been issued to the seller, then they are required to comply with this prior to settlement; otherwise there are grounds to terminate the contract.

So what should you do?

If you have concerns that the property may have been altered or an extension added then it may be worthwhile seeking legal advice prior to signing the contract, otherwise you could be liable to the cost of complying with any future notices in relation to the property, such as applying for council approval, the carrying out of any rectification works, or potentially the demolition of the unapproved alteration to the property.

A lawyer can draft a special condition to the contract, which will make the purchase subject to the outcome of a council approval survey; giving you a right of termination should any unapproved alterations or extensions be found. It may also be worthwhile having the property inspected by an architect or building expert who can check its current state against the approved plans.

[1] Delbridge v Low Q ConvR [1990] 2 Qd R 317.

 

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