Can You Walk Away from a Home Purchase Contract If The Property Has Unapproved Structures?
Purchasing a home typically brings a sense of joy and anticipation. Yet, this excitement can swiftly shift to concern when you uncover unapproved structures on the property, such as an unexpected granny flat or a carport. The prospect of having to dismantle these additions post-settlement is not only inconvenient, but quite possibly expensive as well. It therefore raises an important question: Can you walk away from a home purchase contract in such situations?
This issue is particularly pertinent in light of an investigative report published on ABC News. Despite doing due diligence, homebuyers often confront the reality of undisclosed property defects, including unapproved structures, leading to legal and financial complications. Understanding your legal rights and responsibilities becomes essential in these scenarios, especially when dealing with unauthorised modifications to your new home. Today, we’ll help explain your rights as a homebuyer in Queensland and guide you on whether you can back out of a house sale.
What Approvals Are Required
When it comes to ensuring a new home meets all legal requirements, many are under the impression that obtaining a building approval suffices. However, this is just the initial step in a more comprehensive process.
In Queensland, a range of building approvals is necessary for a property to be legally occupied. Typically, the conclusive step in this process is acquiring either a Form 21 Final Inspection Certificate or a Certificate of Classification. These documents are essential; without them, the legal occupation of the property is generally not permissible. Hence, it's advisable to conduct a building approval search for any property purchase. Also, watch out for the following scenarios - you should ask the seller further questions if you happen to deal with any of these in a house purchase transaction:
● A property that has been completed recently.
● A house with any form of extensions or additions, including features like carports, decks, work sheds or granny flats.
● A home that has undergone significant renovations.
● A property that has been elevated or raised.
Will the issue of unapproved structures be raised in the typical building and pest inspection?
A thorough building inspection can sometimes identify unapproved structures, provided it’s included in the inspector’s brief. A building inspector can assess various aspects of the property, such as structural integrity, damp issues, guttering, and the quality of any additions or alterations. As a buyer, you have the right to request a building inspection as a condition of your offer. Also, it is important to note that a building inspector can’t confirm if a property meets all necessary approvals without conducting specific searches with the local council. Put simply, you should never rely on a Building & Pest inspection to raise issues regarding unapproved structures.
What Can You Do If There Are Unapproved Structures?
What if you discover the unapproved structures after signing? Can you still walk away from that house purchase contract? What should your next steps be?
Discovering unapproved structures in a home you’re about to buy can be a complex issue, and the steps you take depend largely on whether the seller was aware of these unauthorised additions.
If the Seller Was Unaware:
In cases where the seller was not aware of the unapproved nature of the structure, the sale typically proceeds to settlement without any additional obligations on the seller. Once you, as the buyer, become aware of the unapproved structure, it becomes your responsibility to address the issue post-settlement.
This often involves seeking retrospective approval from the local council. However, if the structure is deemed unsafe or poses a risk, you may be required to rectify or remove it, which can be costly.
If the Seller Knew:
The situation changes significantly if the seller was aware of the unapproved structures before closing the sale but chose not to disclose this information. In such cases, the sale contract still proceeds to settlement. However, post-settlement, you may have grounds to take legal action against the seller for failing to disclose crucial information, potentially recovering any damages incurred. There are additional rights under the standard REIQ Contract in the event that the Seller had received notices under the Contract regarding the unapproved structure.
Despite this, in our experience, this is a costly exercise, and a Buyer is in a much better position by having suitable Contract conditions allowing the Buyer to terminate if unapproved structures are revealed prior to settlement.
Consider stipulating in the Offer and Acceptance form that settlement is contingent upon all structures being council-approved. If it's later discovered that there are unapproved structures, you retain the right to terminate the contract.
Seek Expert Legal Advice Today
Unauthorised structures are not uncommon, especially in older homes in Queensland, and often cover additions like patios or lean-tos. Addressing these is usually straightforward. However, structures that present significant safety and insurance risks, such as balconies and decks, require more careful consideration since you may have to remove or rectify them after buying the house. As you can see, it’s very important to be diligent when purchasing property, ask pertinent questions, and engage a competent building inspector to ensure all structures are approved and safe. Also, you should engage an experienced conveyancing lawyer in Queensland to avoid legal complications.
At Bradley & Bray, our team of conveyancing lawyers on the Sunshine Coast is ready to guide you through a residential property transaction. Consult with us before signing a contract, so we can advise you all about the finer details of the sale contract, including the type of searches needed and essential building inspections. In particular, we can help insert a special recommendation into the contract to allow you, the buyer, to carry out more relevant searches and terminate the sale contract if the property is found to have unapproved or unauthorised structures.
Let us help protect your rights as a homebuyer. Give us a call today on (07) 5441-1400 to get started.
This article is general in nature and does not constitute legal advice. If you require legal advice in relation to your personal circumstances, you must formally engage our firm, or another firm to provide legal advice in relation to your matter. Bradley & Bray Lawyers takes no responsibility for any use of the information provided in this article.
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