It’s a key question asked of all sellers when an agent lists their property for sale and by most buyers when purchasing a home. And with the growing number of horror stories in the public domain of unsuspecting buyers being caught out with homes containing non-council approved structures on their hands, buyers can be understandably wary in this regard.
However, we find that most sellers underestimate the importance of not only being prepared to warrant that all of the structures on their property – pre-existing and those added during their ownership- are council approved, but also being able to prove it to the satisfaction of the buyer.
This specific issue was highlighted in a recent case when a dispute between some buyers and seller over the provision of sufficient “proof” of council approval for a pre-existing patio threatened to stall a sale and delay settlement.
In this instance our seller, Mr Barstow, (not his real name) warranted that all structures on his property had council approval on the Offer and Acceptance contract.
But when the relevant council responded, via Orders and Requisitions, to the enquiry regarding structures on the property, there was no mention of the patio. The buyers subsequently assumed that the patio was therefore not approved and hence an “illegal building”.
Understandably, the buyers queried this with the agent and requested to see the necessary approvals prior to settlement. However, the seller dug in his heels and refused, arguing that his warranty should be “proof enough” for the buyer.
We then contacted the council and were advised that their records were no older than the year 2000. Therefore, a search involving anything prior to this time would need to be archive searched, hence incurring further fees and involving additional time.
In an attempt to break the stalemate, we suggested that the buyers consider title insurance. Fortunately they agreed to this once we confirmed that Stewart Title would cover the patio if it was later found to be non- council approved, as long as the archive search was not done. The client actually signed up for title insurance prior to the issue becoming known. We called Stewart title to confirm they would cover the client if it was later found to not be approved.
Luckily for all parties, the sale was able to proceed and settle on time.
The take home lessons for sellers when it comes to council approved structures are:
1. If the sellers are aware of any non-council approved structures on their property, this should to be disclosed straight up and noted on the O & A contract. This also applies to any shire order to remove or tear down any offending structure.
2. If sellers are unaware or unsure of the existence of any non-approved structures they should also either disclosure this on the contract or make enquiries to council prior to signing an O & A contract to avoid any nasty surprises or unwanted disputes down the track.
3. Sellers should be aware that even though, once they settle on a property with illegal additions it becomes the buyer’s problem, they may expose themselves to future action from the buyer if anything should go wrong. This could mean they end up in a costly and lengthy legal battle on their hands, which is something to be avoided if possible.
Image by Thomas Lieser via Flickr.