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 non-approved structures are:
- Sellers should disclose non-approved structures and this disclosure should be noted on the O&A. This also applies to any shire order to demolish any offending structure.
- If the sellers are unaware or unsure of the existence of any non-approved structures they should either disclose this on the contract or make enquiries to council prior to accepting an offer.
- Sellers should be aware that they expose themselves to future legal action from the buyer if it can be shown that there was a deliberate attempt to conceal or misrepresent the property.
- Buyers should consider taking out title insurance to protect themselves against the risks involved with unapproved structures. It’s unwise to rely solely on the disclosures made by the seller.
Image by Thomas Lieser via Flickr.