Buying and selling property with unconsented works

One important aspect to consider when buying or selling a home is whether any unconsented works have been completed on the property.

For a seller, unconsented works should be considered and discussed with your lawyer before you sign an agreement. Under the standard form agreement used by most agents, the seller gives a warranty that where they have done, caused or permitted to be done any works on the property:

• any permit, resource consent or building consent required by law was obtained; and

• to the seller’s knowledge, the works were completed in compliance with those permits or consents; and

• where appropriate, a code compliance certificate was issued for those works.

If you have done unconsented works to your property the standard form agreement will probably need to be amended to exclude this warranty and additional clauses may need to be added to help protect you. Unfortunately, these types of clauses can be discouraging to potential buyers, but they are an important protection for sellers.

For a purchaser, buying a property with unconsented works can cause issues with obtaining a loan to fund the purchase, in respect of your insurance and downstream on a future sale. Often banks are unwilling to lend to a purchaser if there are unconsented works on the property, so this should be checked with the bank before entering into an unconditional agreement.

You will also need to check you are able to obtain property insurance. Sometimes insurers will not provide cover where unconsented works are present. If cover is provided, exclusions may be included to void cover if damage has occurred in the unconsented area, or sometimes if damage has spread to a consented area but originated from the unconsented area. It will normally be a condition of your mortgage that your property is fully insured, so check that you have full cover with no exclusions or limitations.

As mentioned above, unconsented works may also come back to haunt a purchaser when they wish to sell the property as their subsequent purchaser may have similar issues with insurance and lending that may limit sale options and impact on price.

If you are looking at buying or selling a property and would like our assistance, you can call us on 09 421 0559 or email silverdale@simpsonwestern.co.nz.

Note: This article is published for general information purposes and should not be relied upon as legal advice. For advice specific to your legal issues, please engage a lawyer directly.

For exceptional legal support and results, together with a real belief in personal service, please give us a call.

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