Understanding the Law

Why You Need to Be Suspicious of That Recently Completed Granny Flat When Buying a Home

There is a well-known phrase in the real estate industry that reminds a buyer to be particularly careful when they are about to purchase a new property. 'Caveat emptor' is Latin for 'buyer beware', and it's even more appropriate in the case of a recently improved property. If you are thinking about buying a home that has a newly finished extension or granny flat, why should you pause and think again?

Good News or Bad?

There's no doubt that an improved home like this can be attractive as, in theory, the previous owner has spent all the money to complete the extension and you, as a new owner, will get the benefit. Indeed, you may have been thinking about converting part of your new home to cater for ageing parents as it is, so all of this is very timely indeed.

Certificate of Classification

However, you will need to be absolutely certain that the appropriate approvals have been received from the local government and that you will not run into problems following settlement. Remember, an extension like this will require not only upfront approval to allow building work to begin but also final approval before occupancy. In other words, if you don't have what may be known as a 'certificate of classification' or a final inspection sign-off, then that part of the property may be problematic.

Prepurchase Inspection

Some people think that a building inspection will uncover this type of situation, but this is not the case. Your prepurchase inspector will be looking for structural issues and will not be looking for evidence of compliance. In other words, they can complete their work without conducting a record search of any kind.

On the Hook

You may go ahead on your own, complete settlement and take ownership of the property, but the local council may issue an enforcement notice shortly thereafter. In this case, you will be left holding the baby and will be responsible for complying with any notices that you might receive. However, if the compliance notice was issued before settlement, then the seller is on the hook instead.

Correct Approach

This is one reason why you should always work within a conveyancing professional at every stage of the process. They will conduct the appropriate search so that you can be sure of your position, and if anything untoward is found, you'll be able to back out of the contract.