Legal issue: bedrooms sold as 3 bedrooms unit nsw

Discussion in 'Legal Issues' started by Harry Great, 19th Apr, 2019.

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  1. Scott No Mates

    Scott No Mates Well-Known Member

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    That'd be a pretty long settlement period.
     
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  2. Harry Great

    Harry Great Active Member

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    @Terry_w - sorry my bad , yes it was settled way back in 2015. I only noticed when I went for refinancing and bank said it's not 3 bedder. Their record said 2 bedroom. Not sure what record they check against .
     
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    That case relates to termination of a contract. Your contract has ended. Keep researching.
     
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  4. Harry Great

    Harry Great Active Member

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    @Terry_w thanks.

    Did some more research , it looks like below is misrepresentation case

    https://mckenzieross.com.au/professional-indemnity-claims-examples/

    Real Estate Agent Claim 1
    A Real Estate Agent sold a caravan park and business to the Plaintiff. After the transaction was completed, the Plaintiff discovered that the boundaries of the property were incorrectly described in the contract and that some of the caravan sites were not located on the land that had been sold.

    The Plaintiff commenced proceedings against the Vendor, the Real Estate Agent and the solicitor that acted for the Plaintiff on the purchase of the property.

    The Real Estate Agent argued that any representations that were made in relation to the land were those of the Vendor and that it merely passed on the instructions it had received from the Vendor.

    There were however, allegations that the Real Estate Agent had represented the boundaries of the property when the Plaintiff inspected it.

    The matter settled with the Real Estate Agent paying $40,000, but with defence costs of $80,000.


    I am not sure , if this may come under this.
     
  5. thatbum

    thatbum Well-Known Member

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    I doubt anything was incorrectly described on your contract was it?
     
  6. Harry Great

    Harry Great Active Member

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    It is described as 3 bedrooms which is correct but council approved only 2 bedrooms . The thief bedroom is illegal. As per this article agent should have done his due diligence.
     
  7. Harry Great

    Harry Great Active Member

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    Found the explanation of the above case.
    Be aware of unapproved building works when you buy (or sell) - Morse Building Consultancy

    Looks like this is the breach but it is 2017 , the property I bought is in 2015 .Not sure if this applies or not .

    recent case Huang & Anor v Ceylan [2018] NSW, the vendors of a two-bedroom unit had created a third bedroom by constructing a wall on a side of their media room – however this was completed without the approval of the local council.

    It was determined that this amounted to a breach of an implied statutory warranty. As such, the buyers were entitled to rescind the contract of sale and have their deposit returned, in full.

    What we can learn from this case – it serves as a warning to buyers and sellers in relation to the risks associated with buying and selling properties where illegal building works have been undertaken. And, it displays how the courts will classify certain building works and the disclosure obligations for vendors.

    The implied warranty in the Conveyancing (Sale of Land) Regulations 2017 provides that:

    The vendor warrants that, as at the date of the contract and except as disclosed in the contract 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.

    Whether a ‘matter’ was in existence was crucial as to whether a breach of this implied warranty occurred. In this case the judge found that this exists “depends upon the state of the building itself”.

    The building of the new wall was found to not be compliant with the State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 – “it involved the construction of a new wall (containing a doorway), rather than the replacement or alteration of an existing one” and was an “enclosure of an open area“.

    As such, the local council was entitled to make an order requiring removal of the internal wall and the reinstatement of the unit in accordance with the council approved plans and, consequently, a matter “that would justify the making of any upgrading or demolition order” existed.

    So, the breach of the implied warranty was found to have occurred and the buyers were entitled to rescind.

    Now, this case would arguably have had a different result if the contract had disclosed the creation of the third bedroom was not approved by the local council and if the buyer had acknowledged that they were purchasing the residence subject to this non-compliance issue.

    Should you have concerns about
     
  8. thatbum

    thatbum Well-Known Member

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    Does your contract actually describe the property as having 3 bedrooms?
     
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  9. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    I'm confused.
    Is the bedroom illegal because it's not of size or because they never got council approval - or both?
    If it's just because they didn't get council approval then go apply for retrospective approval and it will most likely become 3 bedrooms again.
     
  10. Perp

    Perp Well-Known Member

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    As it has already settled, it's quite a different situation from Huang v Ceylan, which hadn't settled, and Huang wanted their deposit back after rescission (which they got). You'd likely also get yours back in the same circumstances.

    But you're not in the same circumstances. You're extremely unlikely to have a claim against the vendor because as @Terry_w has said a couple of times, it's highly unlikely doubt the contract for sale describes the property as being either two or three bedroom; it almost certainly only identifies a lot and plan - which title you're buying.
     
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  11. Perp

    Perp Well-Known Member

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    Based on what you've said, this sounds like the best advice, provided you have the evidence - advertisements etc.

    I'd also note that you shouldn't purchase another property until you're aware of who is responsible for what. Many of the things you're attempting to blame others for were your responsibility. Your lawyer wouldn't even know the property was supposed to be three bedrooms unless you told them. Your job is to do proper due diligence and ensure that the property is what you wish to buy; a conveyancing solicitor's job - unless you specifically brief them otherwise - is (basically) to ensure that you get clear title transferred to you at settlement, and advising you on the contract that achieves that process, unless you specifically ask for something else.

    You also don't mention a building and pest inspection, which is a wise step in due diligence. Even if you wouldn't have noticed it, most building inspectors would recognise later additions, and warn you to check that they are council-approved.
     
  12. Harry Great

    Harry Great Active Member

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    Contact doesn't go to this level. However, when I signed the deposit , agent filed a form which had
    Thanks for responding . Both..
    , the room size is illegal and doesn't constitute a third bedroom as per NSW law. Council said impossible to get an approval.
     
  13. Harry Great

    Harry Great Active Member

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    Hello - no it doesn't. But it does say in clause that buyer never contacts to vendor direct and agent is responsible for any information provided to buyer. Ie buyer and agents interact and responsible . Then when my solicitor sent questionnaire to sellers solicitor. One of the question asked was , the title should not have an u illegal improvements. The response from sellers lawyer was - no improvement .
    .This gives me a little more confidence now that the ball was dropped by sellers lawyer.
     
  14. Harry Great

    Harry Great Active Member

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    Hello
    Both - size is not legal to get an approval. The local council confirm. It was never approved by council as per the record .
     
  15. Harry Great

    Harry Great Active Member

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    Good to know , I will keep this in mind for the next one .If a house or unit was in a country town I would say this would be good to do pest things by good to know it's mandatory .One well spend ...That is for all this info .Much appreciated .

    In short, I am not blaming anyone here ,just stating that fact ( opinion ) and trying to learn from this form. How other professionals are doing it. But food to know I am on track with avove explanation .

    You never too old to learn but this time in a hard way .
     
  16. Archaon

    Archaon Well-Known Member

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    Pest and building inspection should be done on every purchase IMO.

    Its an extremely huge commitment, and spending the $500 is well worth it.
     
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  17. Marg4000

    Marg4000 Well-Known Member

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    Check with council whether this room can be approved as a study or store room. Maybe not as good for resale as a bedroom, but better than having to demolish the wall.
    Marg
     
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  18. Harry Great

    Harry Great Active Member

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    I am 100% agreed with you , the $500 is well spend.
     
  19. Harry Great

    Harry Great Active Member

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    Thanks for sharing your experience .thanks, I will keep in mind this is to downgrade the severity. However , I would still like to get the real cost and get the fact out .who should be punishable for this issue.

    Also you noted I posted it on internet is that this helps to other investors.

    Once it is discussed on the internet, the knowledge is accessible for all .
     
  20. SoroSoro

    SoroSoro Well-Known Member

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    The consensus seems to be that Harry isn't going to get very far, but isn't this a key point? The seller's representative claimed that there were no illegal improvements. Wouldn't that mean what he purchased is not what was represented?

    Perhaps the improvement is not technically illegal, just not to the approval of the council?