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IMO, you are better off to disclose in a special condition, "The vendor discloses that xxx building work has been done without council approval, and purchaser accepts this in its present unapproved state, and blah blah blah." That way there is no way the contract can be collapsed unless you or...

It is possible for a sale to go unconditional as per a normal sale or at auction and then for the contract to be rescinded by the purchaser and have his full deposit refunded. This happens occasionally in the case where the contract is deficient for some reason - missing a document / having...