Mortgagee auction for a development site: must I pay the architect?

[drfuzzy]

Purchased a development site at a mortgagee auction that came with plans and permits. From my further enquiries I discovered there was money outstanding on work done to date. If I construct the design am I required to pay?

The architect is owed about $40k. The engineer is owed about $15k. So that's $55k owed by the previous owner.

I already have copies of the working drawings and engineering and approved town planning. What am I legally obliged to pay should I proceed? What am i ethically required to pay? How would others approach this?

 

[D.T.]

What does the contract say?

 

[Terry_w]

Purchased a development site at a mortgagee auction that came with plans and permits. From my further enquiries I discovered there was money outstanding on work done to date. If I construct the design am I required to pay?

The architect is owed about $40k. The engineer is owed about $15k. So that's $55k owed by the previous owner.

I already have copies of the working drawings and engineering and approved town planning. What am I legally obliged to pay should I proceed? What am i ethically required to pay? How would others approach this?

Architect would own the copyright to these documents. It probably wasn't assigned to the owner.

Ask the architect to justify his position.

 

[Ausprop]

What does the contract say?

probably says OP has bought a block of land, that's all the mortgagee would have had to sell...tho did the agent (or someone else) represent that plans and engineering were included?

 

[drfuzzy]

The contract is just for an ordinary old house + land

The agent represented the land as having plans and permits but I made my own enquiries and discovered the unpaid invoices and an easement issue.
At the auction the agent did state what he'd learnt from me: ie unpaid invoices and an easement issue.

On the negative side the agent represented the block as "approx 425sqm" when in fact it is 400sqm. Might not sound like a big deal but this is a blue chip suburb where land is circa $4000/sqm.

 

[drfuzzy]

Architect would own the copyright to these documents. It probably wasn't assigned to the owner.

Ask the architect to justify his position.

The architect basically wants to be paid for the work he's done. He has already discounted by about $7k for work done that it is of no value to me. The architect seems like a reasonable guy.

The engineer is offering about a 20% discount only because I pointed out that they are more expensive than their competitor who offered me to start again (lower quote).

 

[NedKelly]

I would have a chat to the administrator/liquidator if there is one. If the architect has submitted a claim then the administrator may be able to deal with those plans and sell them to you.

 

[drfuzzy]

I would have a chat to the administrator/liquidator if there is one. If the architect has submitted a claim then the administrator may be able to deal with those plans and sell them to you.

This is interesting advice. I never thought of that. How would I go about finding who the administrator is? I paid about $400,000 more for the property than the last guy, so I suspect he may have ended up with a few dollars in his pocket.

 

[D.T.]

The architect basically wants to be paid for the work he's done. He has already discounted by about $7k for work done that it is of no value to me. The architect seems like a reasonable guy.

The engineer is offering about a 20% discount only because I pointed out that they are more expensive than their competitor who offered me to start again (lower quote).

I think neither the architect nor engineer are your problem. Choose to use them if you wish, or your own. Weigh them up on their own merits / costs / abilities.

 

[NedKelly]

This is interesting advice. I never thought of that. How would I go about finding who the administrator is? I paid about $400,000 more for the property than the last guy, so I suspect he may have ended up with a few dollars in his pocket.

You can find out who the architect originally did the work for and then look them up in google with the word insolvency after it. You should find it. It the guy made $400K their should be enough left over to pay the architect then.

 

[Aaron_C]

Potential copyright issue. Architect has no legal claim against the property, but if the permit has already been issued with the plans stamped I really don't see how the architect can claim anything from you.

 

[nhg]

Wouldn't the bigger issue be the advertised 425sqm vs the actual 400sqm?

Were you aware of this when you made your offer?

 

[drfuzzy]

I was not aware when I won the auction and a bit upset, actually.
The agent used RPdata rather than a site survey and RPdata is wrong. I obtained site survey from the architect showing size is 400.5.
The agent advertised it as "approx 425sqm". The site is land value only - old house is not suitable for habitation in its current state.
What recourse would I have against the agent? I don't want to back out of the sale. Settlement was 6 months ago now.

 

[cu@thetop]

Potential copyright issue. Architect has no legal claim against the property, but if the permit has already been issued with the plans stamped I really don't see how the architect can claim anything from you.

Architect may be able to argue no licence to use the copyright if he remains unpaid. It is not so much that the copyright for the building on that piece of land may lay with the former owner or liquidators- but if you used the plans and couldn't prove title then you could be injuncted half way through construction with no readily available relief.
Mortgagee sale contract will be as is where is with no other promises attached.

See what the liquidators say.

 

[westminster]

I was not aware when I won the auction and a bit upset, actually.
The agent used RPdata rather than a site survey and RPdata is wrong. I obtained site survey from the architect showing size is 400.5.
The agent advertised it as "approx 425sqm". The site is land value only - old house is not suitable for habitation in its current state.
What recourse would I have against the agent? I don't want to back out of the sale. Settlement was 6 months ago now.

What was on the section 32? That usually has the title information which would be accurate.

As to Engineers - if the DA was approved based on those engineering drawings and you don't need any further Engineering assistance based on those plans for building then I wouldn't pay. The agreement was between them and the previous owner who contracted them to provide a service. The previous owner undertook the DA based on that work.

As to Architects - this is less clear. If the Section 32 and/or Contract stated it came with DA permission or Development Approval then you own the 'approval' not the plans. If it said that it comes with DA, Full working drawings, architect designed plans blah blah then you would expect these are unencumbered to you.

I think talking to liquidator is good idea - but it's been 6mths! Why wasn't these things looked into before?

 

[westminster]

The contract is just for an ordinary old house + land

The agent represented the land as having plans and permits but I made my own enquiries and discovered the unpaid invoices and an easement issue.
At the auction the agent did state what he'd learnt from me: ie unpaid invoices and an easement issue.

On the negative side the agent represented the block as "approx 425sqm" when in fact it is 400sqm. Might not sound like a big deal but this is a blue chip suburb where land is circa $4000/sqm.

Oh hang on I change my advice

You knew going into the auction that these were unpaid, presumably you then BID taking that into account? ie, it's worth $600k but I'll bid to $560 because there is outstanding accounts that I may need to pay to get the project underway.

 

[Terry_w]

Under the Personal Properties Securities Act (PPSA) unless the architect has registered their interest over the plans then they may actually belong to the person who held them and if he has gone under then maybe the trustee in bankruptcy.

 

[chilliblue]

Have you spoken to the selling agent and see where they stand seeing you made the purchase with their representation which makes them responsible.

 

[drfuzzy]

What was on the section 32? That usually has the title information which would be accurate.

....
As to Architects - this is less clear. If the Section 32 and/or Contract stated it came with DA permission or Development Approval then you own the 'approval' not the plans. If it said that it comes with DA, Full working drawings, architect designed plans blah blah then you would expect these are unencumbered to you.

I think talking to liquidator is good idea - but it's been 6mths! Why wasn't these things looked into before?

Good advice in this thread for me. The Section 32 states "Bank in possession as mortgagee", the title seems to be an individual +/- his partner. I can't see any company names.

I have tried searching for "Firstname lastname insolvency" in google but can't find much except that the original owner was the director of a failed buisness that went into liquidation a couple of years before the house was sold. I am trying to contact the liquidator of that business. Is it possible the owner was not actually a bankrupt, and the bank took the title and extracted money owed without bankrupting the owner?

How can I find out if a Mr X has ever been a bankrupt and if so if he had a liquidator? Am I on the right track?

 

[NedKelly]

Good advice in this thread for me. The Section 32 states "Bank in possession as mortgagee", the title seems to be an individual +/- his partner. I can't see any company names.

I have tried searching for "Firstname lastname insolvency" in google but can't find much except that the original owner was the director of a failed buisness that went into liquidation a couple of years before the house was sold. I am trying to contact the liquidator of that business. Is it possible the owner was not actually a bankrupt, and the bank took the title and extracted money owed without bankrupting the owner?

How can I find out if a Mr X has ever been a bankrupt and if so if he had a liquidator? Am I on the right track?

If the owner didn't go bankrupt he should pay the architect. The liquidator of the business should tell you that.