Work without building permit - VIC

[melbmeg]

Wondering whether anyone has any advice or experience with this situation!

I want to sell an IP that has a cabin on it that does not have building permit. The house is about 50 years old. The cabin has been in place for about 6 months. It didn't need planning approval (as it has no kitchen and is not joined to house). It's an area that's full of holiday houses, so extra accommodation is always useful.

I couldn't actually get a building permit for the cabin - when I enquired with a builder surveyor I was told that cabins don't comply so there's no point even trying. They also told me that it was highly unlikely the council would care about the (illegal) structure unless a neighbour dobbed me in, which hasn't happened.

I really don't want to remove the cabin to sell the property as it's fully integrated now, with decking, plumbing, electrical connection etc. It sleeps 6 and I think it's a real selling feature (this permit issue aside!)

I was planning on being completely open about the fact that there is no building permit when I put the property on the market. (I assume it has to go in the S33 anyway.)

The property is in my name and I expect a fair whack of CGT when I sell it, which is fine. I do have the option of selling the property to my husband so that he can sell it, if that makes any difference. Another option is that I just sell it to him and we keep it and rent it out, although I'd much rather liquidate it. (I'd do that because I own it outright and we have a big home mortgage.)

Any advice about what to do in these situations or what I can expect to happen when I try to sell it, oh wise Somersofters?

 

[Terryw]

Selling to your husband may be done but CGT would be assessed at market values. Stamp duty may be exempt if the property in in Vc though.

When you sell the property you may need special conditions in the contract so that the purchaser cannot come back and make a claim that they didn't know the structure wasn't approved. So best to use a lawyer for the conveyancing I think.

 

[Propertunity]

Any advice about what to do in these situations or what I can expect to happen when I try to sell it, oh wise Somersofters?

I agree with what TerryW has said.

Put a special condition in the contract stating that the cabin was built without council permission and that the purchasers acknowledge that fact. I've seen this many times in contracts of sale.

If you don't do this, what WILL happen, is that intending purchasers will make enquiries of the local council to find out if it is approved or not. It will only take a small number of these enquiries to alert the council to the situation......and they may take action against you. I've also seen this happen a few times.

There is nothing to be gained by selling it to your husband first as far as I can see.

Being a long term 'buy & hold' investor myself, I am not in favour of selling but if you want or need to - its up to you.

 

[melbmeg]

Great advice

Thanks a lot guys - sounds very sensible. I love how you can ask a question on her and get responses in ten minutes!

Holding it is probably the sensible option, you're right propertunity, but this is a bit of an emotional/lifestyle decision.

 

[Melbournian]

strange - the building surveyor should be able to make it compliant by undergoing a checklist

otherwise, i would ignore it and not put too many conditions as it would just attract unnecessary attentino. i've seen ppl do illegal renos before and also sold.

 

[DeanW]

Not sure I'm correct here but I've just gone through a similar experience. The property I've just sold had a deck built on top of a garage that was anything but to code (never got building cert etc). I was informed by my realestate agent to remove the deck as it could possibly open me up to a buyer pulling out of the contract at any stage (eg they could pull out one week before settlement due to the 'illegal' structure if they wished).

In my case the deck didn't offer a whole lot to the house so I was happy to rip it down.

Interested to hear from those that know as to whether this is correct or not. I was informed that ruling's in regard to such structures had changed in the past year or two? BTW I'm in Vic.

 

[Terryw]

Not sure I'm correct here but I've just gone through a similar experience. The property I've just sold had a deck built on top of a garage that was anything but to code (never got building cert etc). I was informed by my realestate agent to remove the deck as it could possibly open me up to a buyer pulling out of the contract at any stage (eg they could pull out one week before settlement due to the 'illegal' structure if they wished).

In my case the deck didn't offer a whole lot to the house so I was happy to rip it down.

Interested to hear from those that know as to whether this is correct or not. I was informed that ruling's in regard to such structures had changed in the past year or two? BTW I'm in Vic.

Hi Dean

In NSW there is an implied warranty in contracts for the sale of land that

there is no matter in relation to any building or structure on the land (being a building or structure that is included in the sale of the land) that would justify the making of any upgrading or demolition order or, if there is such a matter, a building certificate has been issued in relation to the building or structure since the matter arose

If there was an illegal structure and it wasn't disclosed then it would be a breach of contract. A purchaser could then rescind the contract up to the completion date provided they didn't know about it and wouldn't have entered the contract if they did know about it.

 

[arriety]

IN SA I know of a case where a large illegal deck was sold with the house and really it was the deck and view which sold the house. The new owners (friends of mine) did not know or check that the deck was not council approved. Later they wanted to do repairs on it and found it it was not compliant and could be dangerous. They then successfully sued the previous owners for replacement of whole deck!

 

[fernfurn]

sell the house at auction then there are no come-backs, otherwise I wouldl have thought it would be onthe section 27, house approved, no approval for the edeck etc.

 

[Propertunity]

sell the house at auction then there are no come-backs, .....

Incorrect.

I recently saw a contract fall over that had been sold under the hammer at auction. The contract did not contain all the necessary paperwork (in relation to a BC matter where the BC did not sign off on a renovation undertaken by the vendor on his unit). The purchasers were refunded their 10% deposit and the contact rescinded.

 

[hysterical]

Incorrect.

I recently saw a contract fall over that had been sold under the hammer at auction. The contract did not contain all the necessary paperwork (in relation to a BC matter where the BC did not sign off on a renovation undertaken by the vendor on his unit). The purchasers were refunded their 10% deposit and the contact rescinded.

I wonder if this is only allowed in Sydney or can this also occurred in other states ?

Cheers

 

[Terryw]

I would think it could happen in most if not all states. This is because there is usually legislation that requires a contract for the sale of land to include certain searches or documents, such as a sewer diagram etc.