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Written by Peter Carter

April 11, 2009

What can a buyer do after a house contract is signed if they discover through solicitors’ searches that there is no council building approval for part of the home?

Standard condition 7.6 of the REIQ residential house & land contract states:-

Any valid notice or order by any competent authority… must be fully complied with:
(a) if issued before the contract date, by the Seller..;

(b) if issued on or after the contract date, by the Buyer.

Thus a Buyer assumes liability for any unapproved alterations etc to the home discovered after a contract is signed. Such liability may include the cost of obtaining council approvals or demolition of the alterations if they cannot be made to comply with council rules.

The result may be different if a Seller deliberately conceals lack of council approval. If a Seller knows some parts of a home are not approved, they would be prudent to include a special condition into the contract disclosing the fact.

We also recommend that if a Buyer is at all concerned about the approval status of any part of the home, that a special condition be included to the effect that the Seller warrants that all improvements have all necessary local authority and other approvals.

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