One of the many risks facing purchasers of real estate is the possibility that building works at a property (for example – a renovation or construction of a shed/garage) have been performed illegally without a building permit from the responsible authority (Council).
Although it is an offence for a property owner to perform building works without a building permit (where required), purchasers should be aware that they will become responsible for any illegal building works at a property from the date on which they sign a Contract of Sale. All purchasers of real estate should inspect the relevant property and make appropriate enquiries to determine that all building works undertaken at the property have been performed legally and with the consent of any required authority. Specifically, purchasers should ensure that:
- A building permit was issued for all building works (where required);
- A certificate of final inspection/occupancy permit has been issued in respect of the building works; and
- Appropriate insurance cover is in place.
If a purchaser fails to identify illegal building works prior to entering a Contract of Sale, that purchaser will become responsible for any building notice or order issued by Council in respect of those illegal building works. Although it is possible to legitimise illegal building works, this process can be costly, time-consuming and stressful, especially where the works were in fact undertaken by a previous owner of the property. It is also possible that Council may ultimately deem the works unsuitable and may require that they be demolished or that rectification works be completed.
In summary, all purchasers should satisfy themselves that any building works at a property have been performed legally and with the knowledge and consent of Council prior to entering a Contract of Sale. If purchasers are unsure about the legality of any building works, they should make appropriate enquiries with Council and/or any other relevant authority.