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What is the problem with unapproved building works?

A few years ago, Shire Legal acted for a client purchasing a property at Kurnell.   There was nothing particularly unusual about the transaction – it was a standard family home being sold from one family to another.

However initial enquiries carried out by Shire Legal suggested that the recent renovation at the rear of the property was unapproved.  The significant risk in purchasing a property with unapproved building works is that not only is the workmanship potentially dangerous (particularly if it was carried out by an unlicensed tradesman), but the property owner could be ordered by Council to demolish the building works if it doesn’t comply with Council regulations.

This would no longer have been an issue for the vendors if they were able to sell the property without any questions being raised by the purchasers, but luckily for the purchasers, we picked up on the unapproved works prior to contracts exchanging.

So how were the purchasers protected?

Shire Legal was able to request a special condition be inserted into the Contract to make the entire Contract subject to our clients being able to obtain a satisfactory Building Certificate from Sutherland Shire Council.  We thought it was a pretty bold move, but one worth making.

Renos 223

So, what was the outcome?

Fortunately for our clients (and the vendors!), the certifier from Council inspected the property and issued a Building Certificate.  Meaning that no rectification work was required, and the previously unapproved works were now approved.

But what if they weren’t approved?

Nevertheless, the special condition would have given our client a way to get out of the Contract if the Council was not prepared to grant the Building Certificate.  The vendor then would have the responsibility of making the property comply in accordance with Council’s requirements, something that our clients would not have wanted to do at their own cost.

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Make sure that you conduct sufficient searches and enquiries in relation to any property that you are purchasing – in particular, don’t take the risk with unapproved building works.

Contact Shire Legal on 95263444 or info@shirelegal.com.au if you have any questions about purchasing property.

Are you buying a property with friends or family members? What you need to know about co-ownership.

Rising house prices across Sydney have made it difficult for people trying to enter the property market. In response to this we are seeing more and more people buying property with friends or family members rather than trying to go it alone.

This can be a great solution because sharing the costs of buying and holding property puts owning property within reach for many who otherwise wouldn’t be able to afford the current property market.

But what happens if these friends have a falling out?  What do you do when one of you wants to sell but the other doesn’t?  Trying to resolve these kinds of situations can end up costly and time consuming for all parties.

So how do you avoid this and best protect yourself should things not work not the way you had hoped?

Put in in writing!

We cannot say this enough when it comes to entering into any kind of financial relationship with someone else.  Having a written agreement in place from the outset will save plenty of headaches later.  Whilst everyone may have every intention of harmoniously sharing property with others, things can happen and circumstances can change – which is when having a written agreement in place, addressing what happens in these instances, is invaluable.

House

Some of the main things to consider when purchasing property with other people are:

What proportion of the property will each person own?

If each person is contributing to the purchase costs equally then it’s common for the parties to own the property as tenants-in-common in equal shares (that is, 50/50).  If one party contributes a larger amount than another though, then the parties’ shares in the property can reflect this difference.  For example rather than owning the property equally, the parties may decide that an ownership of 60:40 is more appropriate given the parties’ contributions in purchasing the property.

How will the property be used or occupied?

If all parties will be living in the property then this is relatively straightforward.  It becomes more complex however, if not all of the parties will be living in the property and things such as who will be responsible for the maintenance and upkeep of the property and the apportionment of rates will need to be considered.

What if one party can’t pay their share of the expenses?

Life can throw curveballs and it may be that at some point one of you may not be able to cover their share of the rates or the cost of unexpected repairs or maintenance. So what happens then? If another party pays it for them when and how will this be paid back? Will they be compensated? Will it be treated as a loan with interest be payable?

What if a party wants to sell their share?

The sale of an interest in a jointly owned property is usually not something that can be readily sold on the open market.  Particularly if the joint owners live together, then the remaining owner would no doubt wish to have a significant say in who is able to purchase the outgoing owner’s interest – ideally, with a right of first refusal (that is, the right to purchase the outgoing owner’s interest) and then if the remaining owner does not wish to purchase the share, then the outgoing owner should have the right to force the sale of the entire property.

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Whilst the above list is not exhaustive, it certainly is indicative of the types of issues that need to be discussed between the joint owners, and the agreement recorded in writing – ideally before the property is purchased.

If you have any questions about joint ownership, please contact the team at Shire Legal on 95263444 or info@shirelegal.com.au

Do I need to disclose pre-existing termite damage to my home?

Unfortunately it’s a fact of life that many houses in bushy areas, such as the Sutherland Shire, are subject to termite invasions. It is actually more common than not for homes in the Shire to already have pre-existing termite damage.

But what if the pre-existing damage is so substantial, that it threatens the structural integrity of the home?  And what if the vendors selling the home already know about the damage?

The District Court of New South Wales (and subsequently the Court of Appeal) dealt with this type of situation in the case of Wood & Anor v Balfour & Anor [2010] NSWDC 139. This case centred on the purchase of a property located in Kareela. The property had been owned by the Balfours from the time it was constructed in 1980 until it was purchased by the Woods in 2004.

During their ownership of the property, the Balfours discovered termite activity in the timbers of the home, and had the home treated by a pest control company. They later discovered three further areas of termite damage, and then took steps to repair and cover the damage in each of these areas. The repairs included cosmetic building work to cover the damaged areas. The last of these repairs were completed in 2000.

Four years later, the Balfours placed their property on the market and sold the property to the Woods. After purchasing the property, the Woods discovered the extent of the termite damage was greater than expected.

The Woods sued the Balfours in the tort of deceit, alleging that the concealment and non-disclosure of the termite damage constituted a fraudulent misrepresentation that there was no serious termite damage to the property. The Woods also alleged the Balfours knew this representation was false and intended to deceive the Woods.

LPP

At the trial in the District Court of NSW, the judge rejected the Woods’ claim, holding the alleged representation was not made, and, even if it had been made, it had not been false, and the Woods had not relied on it. The decision upheld the principle of ‘caveat emptor’ meaning let the buyer beware. Further, the Contract included a Special Condition which specifically acknowledged that the purchaser was not relying on any representations made to them by the vendor.

The trial Judge found that the work carried out to conceal the past termite activity was done for aesthetic purposes and not with the intent of deceiving prospective purchasers.

The Woods appealed the District Court decision and the matter was heard in the NSW  Court of Appeal.

The Court of Appeal found that by making the property available for inspection and being silent as to the existence of any latent defects, the Balfours created the implication that the vendor had not knowingly concealed any defects that would otherwise be visible to the eye or otherwise discoverable by the exercise of reasonable care when inspecting the property.

The Court found that the conduct of the Balfours was not fraudulent. It was not enough for the Woods to prove that the Balfours were aware of the damage. In order to be successful in bringing a claim in the tort of deceit, the Woods needed to prove that the Balfours were aware that the property had substantial termite damage which compromised the structural integrity of the property. The Court of Appeal therefore dismissed the appeal and the trial judge’s decision that the Balfours were not liable to the Woods was upheld.

Whilst the appeal was unsuccessful, it is clear that if you as a vendor are aware of the existence of substantial termite damage which compromises the structural integrity of the property and you takes steps to conceal such damage from prospective purchasers, you  can be held liable for losses suffered by the purchasers.

For assistance with the sale or purchase of property, contact Shire Legal’s property team on 9526 3444.

 

Have you got that “sinking” feeling?

Natural Rights – The Right to Support

In recent weeks there has been a story in the news about the evacuation of a unit block in Harris Park after a sink hole opened up alongside the building. The recent heavy rain combined with the flooded excavation site next door caused the wall of the excavated site to wash away to such an extent that it put the foundations of the unit block next door at risk.

So what happens in a situation like this? Whose fault is it? Is it anyone’s fault at all? Or is it simply an unfortunate situation caused by the large amounts of rain which flooded the site?

The short answer is yes, it is someone’s fault.

Section 177(2) of the Conveyancing Act 1919 imposes a duty of care under the common law of negligence in relation to the right to support for land. It states that a person has a duty “not to do anything to land that removes or reduces the support that that land gives to other land.” It applies only to positive acts and not to the failure to do something. For example, a person will not be liable because they did not do something to prevent the loss of support to land from occurring, but will be liable if they actively did something that reduced or removed the support, such as excavating too close to the boundary.

As the duty is based on the principles of negligence, to show that the duty has been breached the loss or reduction of support must have been a reasonably foreseeable result of the action taken.

Damages can be sought in compensation for loss suffered as a result of the breach of duty. You may elect to receive compensation for either the loss in the value of the land or the cost of re-instatement. The courts will not however award compensation for re-instatement that is excessive when compared to the loss in value of the land.

This right is also compliments in 98F of the Environmental Planning and Assessment Regulation 2000 which requires a person excavating below the base of the footings of a building on adjoining land the excavator must “preserve and protect the building from damage” and if necessary underpin and support the building.

So if you are planning a medium or high density development which requires significant excavation close to the property boundary make sure that you consult engineers in relation to support for the neighbouring land to avoid any problems down the track.

If you would like more information please contact our office.

Harris Park Sink Hole

Harris Park Sink Hole

Introducing the Food and Grocery Code of Conduct

A voluntary code of conduct for the food and grocery industry has been introduced under the Competition and Consumer Act 2010. The Code governs certain conduct by grocery retailers and wholesalers in their dealings with suppliers.

Only those retailers and wholesalers that have elected to be bound by the Code by written notification to the ACCC will be bound by it.

For the purposes of the Code:
* a retailer is a corporation that carries on a supermarket business
* a wholesaler is a corporation that purchases groceries from suppliers to resupply to a supermarket
* a supplier is someone who is carrying on (or seeking to carry on) a business of supplying groceries for retail sale by another person (including another business).

An important element of the Code is the express requirement for retailers and wholesalers to deal with suppliers in good faith – for example, during the bargaining stages of establishing grocery supply agreements, during the term of the agreement, and in dealing with any disputes.

As stated by the Small Business Minister Bruce Billston,

“this is about promoting fair and healthy competition.”

There are concerns in the industry that the Code has not gone far enough because it is not mandatory, and only binds those that have voluntarily signed up to it.  It is believed that Coles and Woolworths will be signing up, however Metcash (IGA) at this stage has refused.

Sutherland Shire Local Environmental Plan 2013

There is a lot of interest regarding the proposed rezoning of the Sutherland Shire, pursuant to the newly drafted Sutherland Shire Local Environmental Plan 2013.

The key topics arising under the draft LEP include:

  • the foreshore building line will be indicated as a line on a map, rather than being indicatively mapped (as is presently the case under the 2006 LEP).  Only limited development is permitted within the foreshore area.
  • there will be density controls on areas at risk of bushfire – this will be achieved by prohibiting vulnerable developments (such as child care centres, retirement villages, schools and medium density housing) and otherwise limiting permissible uses in those areas.
  • there will be an increased ability to build dual occupancy properties (e.g. the restrictions on permissible lot widths and lot sizes have been relaxed)
  • minimum lot sizes for future development have also been relaxed (e.g. minimum lot sizes for villas, townhouses, residential flat buildings and senior housings have been totally removed, and instead, Council will consider each proposal on its merits, having regard to the neighbourhood)
  • permissible height limits of buildings have increased, to facilitate Council’s housing strategy
  • different floor space ratios may be applied for different locations within the same zone.  The Council will consider an alternative floor space ratio where significant public space or benefit results from the development.
  • minimum landscaped area requirements vary between 10% and 40%, depending on the zone, type and intensity of development.
  • with waterfront development, Council has sought a balance between protecting and enhancing the scenic and environmental qualities of the waterways and meeting residents’ reasonable expectations to develop their land.

Once Council has finished considering the 1,300 submissions on the latest version of the LEP, a final version of the plan will be forwarded to the State Government for finalisation.

Please contact Melissa Lammers, Solicitor Director, on 9526 3444 or mlammers@shirelegal.com.au if you have any questions.