Insurance for residential building works

Discussion in 'The Buying & Selling Process' started by pinot, 6th Nov, 2019.

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  1. pinot

    pinot Active Member

    Joined:
    24th Jan, 2019
    Posts:
    43
    Location:
    Burwood East
    Hi all,

    I am reviewing a contract in NSW and have read through the Certificate in respect of insurance for residential building works.

    The vendor/developer has under-reported the contracted amount for the build ($200k - 1 side of a duplex on a 550sqm block in Padstow NSW. I believe average build per duplex at approx $400k). I am trying to work out the consequences on my end as a buyer should this property have some serious issues.

    Will I have difficulty with building insurance?
    Will my claim be capped to the cost of the build?
    Should I try and negotiate a price reduction with vendor due to this? Are there any red herrings I should be watchful of?
    How should I best approach the negotiation with this in mind?

    Property is in Padstow NSW and there isn't a great deal of supply, so if I don't play it smart, I suspect the first person who reads the contract and skims over this detail is going to probably offer more.

    Thanks
    Kevin
     
  2. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    18,486
    Location:
    Sydney
    Are you confusing cost with value ? A builders cost is not what the owner pays.
    A $400K duplex implies a $800K whole of building construction cost. ??? No way.

    I would argue the issue requires legal advice to ensure you understand what liability or issues (if any) may arise. If there are none then the issue will clear your mind. If there is one its a price / sale negotiation point perhaps
     

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