Legal Tip 266: Former Owner of Property Liable for Damages?

Discussion in 'Legal Issues' started by Terry_w, 24th Jan, 2020.

Join Australia's most dynamic and respected property investment community
Tags:
  1. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    41,996
    Location:
    Australia wide
    When a building works are done any defects are covered by statutory warranties. In NSW the Home building Act 1987 (NSW) can apply.

    Major defects are covered by a 6 year warranty and for other defects the warranty is 2 years.

    This means that if you build or renovate a property and there is a defect within 6 years of the date from the completion of the work, you could be liable to compensate the new owner of the property. This happened in a recent NSW case where the former owner had to pay the new owner more than $42,000 in damages. You can still be liable even if you used builders – they might have to be joined as parties to any litigation or you might have to sue them to recover any money.


    NSW Case
    Stevenson v Ashton [2019] NSWSC 1689
    Stevenson v Ashton - NSW Caselaw


    See two articles by Anthony Cordato
    Can a home buyer claim compensation for a water leak after settlement?
    Can a home buyer claim compensation for a water leak after settlement? - Lexology

    and
    Is a seller responsible to fix a water leak after settlement of the sale of a house?
    Is a seller responsible to fix a water leak after settlement of the sale of a house?


    I don't practice in the area of litigation - this is not my area of interest, but thought I would post because this is relevant to property and not many know this could happen.
     
    Terry_w, 24th Jan, 2020
    #1
    VB King likes this.
  2. DaveM

    DaveM Well-Known Member

    Joined:
    14th Jun, 2015
    Posts:
    3,761
    Location:
    Adelaide & Sydney
    Both the above appear to be where the vendor had an owner builder license and did works under this license, and applicable statutory warranty transferring to the purchaser.

    Bit different to Joe Smith selling his PPOR and a new buyer claiming compensation.
     
    DaveM, 24th Jan, 2020
    #2
  3. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    41,996
    Location:
    Australia wide
    Yes this is where there are building or renovation works done.
     
    Terry_w, 24th Jan, 2020
    #3
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,536
    Location:
    Sydney
    A conveyancing solicitor I used some time ago suggested one of the first things he recommend people check for a recently new build or major reno is its council approvals. He sent me to council to get the search docs and bring back. Now its all online.

    If its a OB approval he suggests you check their is a warranty policy covering 100% of the dwelling. If not, you walk. No negotiating.
     
    Paul@PAS, 24th Jan, 2020
    #4
    balwoges likes this.
Client Directed Portfolio Super your way

We provide our clients with the opportunity to select their own investments from a wide range of ASX listed securities. We provide the research to ensure your selections will achieve the goals. This is the value of advice.