The Hidden Risks of not Getting Building Compliance Reports 1

Wednesday, June 8th, 2016
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Compliance of the buildings located on a property is often not considered by buyers when they are looking to buy a residential site. Unknowingly, buyers regularly buy properties where the structures are unapproved and often poorly constructed.

Even when they are well constructed, if they are not approved, they are essentially illegal structures if they fall outside the relevant guidelines.

There can be significant ramifications when buying a property that has unapproved structures, and a classic example is a large deck that has been attached to the rear of a dwelling and has been inadequately supported and secured. If this poorly constructed deck collapses during a party, the owner is likely to find their building insurance policy will not cover the damage or the subsequent lawsuits from the injured partygoers, as the structure was not approved.


Left: This deck was not approved
Right: Sadly, neither was this one

It is really easy for a purchaser to be caught out when buying, as they are advised by many parties in the process that all is okay, and those parties genuinely believe that to be the case. The seller and/or agent advises the buyer that council was out a few years back and issued a certificate for all the structures at the property. The reality is that what was issued is a building certificate or s149D, and this was issued 10 years earlier.

A building certificate is not full approval and is merely council assessing the property for major issues such as unsafe structures and stating that they do not have an issue with what has been constructed. It also means they will not seek orders to have any structures altered or demolished. There is a catch, however, and that is the certificates have a lifespan of only seven years, after which time a new application needs to be made to the local council for an updated certificate. Many changes may have occurred in the 10 years since the building certificate was issued.

The other false sense of security will often stem from the buyer’s solicitor sending a letter to the council and requesting a building file report. Council will diligently review the building file and provide a written report which outlines all the details of development applications (DAs), building applications (BAs), building permits, final certificates and so on issued for structures at the property.

The issue that arises in this situation is that the information council has on file is only the “known items” that are registered with the council and not the unknown structures or modifications. Yes, a deck may have been approved and all the requisite inspections and paperwork issued by the council; however since council issued the final certificate three years ago, the owner may have demolished that deck and constructed a new, bigger deck higher off the ground.

The concern for buyers is that ultimately they may not be getting what they are paying for if they do not check out a building file properly. The risks of not having the full picture are many and varied, but can result in loss of value of the property, buildings not being covered by an insurance policy and worse still, personal injury for an owner or occupant due to a poorly constructed and non-compliant structure that exists at a property.

The governing authority and local rules can vary from state to state and even from council to council, so this can be a bit of a minefield. In my opinion, a buyer should always obtain a building compliance report when they are purchasing to avoid those hidden and often costly surprises. It is vital that any report includes an onsite assessment to compare what exists on the property with what is recorded on file at council.

You will find many pre-purchase inspectors will not carry out compliance inspections as they are not experienced or qualified enough to assess for compliance. At a bare minimum, a buyer should take a look at the council file themselves to get some understanding of what is and what is not approved. Ideally, however, they should engage a qualified and experienced consultant to assist them with this process.

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  1. Branko Mladichek

    Excellent article Bruce, highlighting compliance risks for the property purchaser and I attest that illegal construction is common defect. Bruce's article is timely and relevant because compliance report is one of those reports excluded under AS 4349.1
    There are many other risks.
    Most purchasers think that if they get pre purchase inspection report then they will be pretty well protected against risks and nasty surprises. Nothing could be further from the truth and competent pre purchase inspection report is merely a risk reduction for the purchaser and not a guarantee that the building is free from defects. Why?

    1 Inspection. There will rarely be a perfect inspection due to restrictions (inspector cannot see behind walls and behind full closet, and safe access limitations (inspector will not climb 6m high to inspect roof or go into undersized floor space and roof space). So a visual and non invasive inspection cannot pick up everything. Your risk!

    2 Expertise. Your inspector is not expert at everything. I am building expert but not licensed plumber, licensed electrician or registered structural engineer. This is why expertise outside inspectors competence is deferred to others and there are recommendations for the purchaser to get additional reports (as Bruce alludes one of these is compliance report) If you don't then you are underwriting your own risk.

    Choose your inspector carefully and look closely at qualifications(in building, not arts or education, they are about as relevant as study of rats), experience(extensive), equipment(thermal imaging), professional indemnity insurance, track record, longevity in business and references.

    Mission statement is no substitute for qualifications.