When buying an ACT residential property, it is common to encounter structures which require a form of approval, but have not been approved by the planning authorities (unapproved structures). Usually, Sellers will require the Buyer to take the property ‘as is’ – with all defects and unapproved structures (if any). While Buyers can try to negotiate on this point, most Sellers insist on the property being sold with the unapproved structures disclosed.
It is important to note, however, that under the contract, the seller must disclose all unapproved structures otherwise the Buyer may require the Seller to obtain the approval before Completion, and if the approval is not obtained before Completion, the Buyer may rescind the contract, or complete the contract and sue the Seller.
The significance of accepting an unapproved structure is twofold. First, the Buyer runs the risk of the planning authorities issuing a rectification order, requiring the Buyer to alter or remove the unapproved structure. Second, insurers may be reluctant to cover any claims that arise out of an unapproved structure. For example, if a Buyer purchased a property with an unapproved fireplace and the property burns down because of the unapproved fireplace, the Buyer may have issues trying to claim on the policy.
Given these risks, we recommend Buyers review any inspection report contained in the contract which identifies unapproved structures and make further enquires with the relevant authorities.
In NSW there is no requirement for a vendor to provide the purchaser with a compliance report. It is important the purchaser completes their due diligence and obtains compliance information from the local council.
More information on unapproved structures in the ACT can be found on the planning website: