Purchaser Q&A

Illegal Structures

I have purchased a property which has a pergola which I discovered has not received council approval. Can I avoid the contract?

In short, No.

Section 32 of the Sale of Land Act does not require disclosure of any works conducted “without” a permit.    Nevertheless, if the works were done by the person registered on title, then this may be considered Owner Builder works in which case you may be able to avoid the Contract under Section 137B of the Building Act (s137B) (refer to sale Q & A which explains s137B).

It is always recommended that prior to signing a Contract of Sale, you conduct your own due diligence which should include comparing any building plans lodged with council with the physical structures at the property.

You should also keep in mind that any notice served after the date of the contract will be the purchasers responsibility so caution should be taken.

Early Settlement

During the contract, the vendor asked the purchaser for an earlier settlement date. The purchaser agreed. The purchaser was unable to complete settlement due to delays with their bank, but was able to complete settlement before the original date fixed for settlement. Is the purchaser obliged to pay penalty interest?

Yes, where an earlier or later date is agreed between the parties (without any conditions), then that date becomes the settlement date and failure to settle on that date constitutes a breach of contract.  It is always recommended that a Deed of Variation be signed to bind all parties.

It is recommended that no changes be made to any settlement date unless all parties are ready for settlement.

Removal of Chattels prior to settlement

At a final inspection it has been discovered that the light fittings which were included as chattels in the Contract of Sale have been removed. Can a purchaser deduct the estimated cost of replacement from the settlement proceeds?

The standard Contract of Sale requires the vendor to deliver the property and chattels in the same condition as at the day of sale ie. the date the contract was signed. fair wear and tear excepted. Nevertheless, this does not entitle the purchaser to make a deduction at settlement, as the condition specifically states that failure to deliver the chattels creates a right to compensation only. Morally however it may be argued that a vendor should negotiate a deduction of an agreed amount at settlement, but if that is not agreed, a purchaser may only sue for compensation after settlement.

Disclaimer – Any information contained herein should not be relied upon and you should always obtain independent advice.