When people buy a property they expect the building to be approved. It can be costly if it is not.
In the ACT there are two important terms that are deceptively similar but different. The first is a Certificate of Occupancy and Use and the second is a Compliance Certificate.
In a nutshell when a house is built, additions constructed, or various other structures added they need a Certificate of Occupancy and Use. Usually the Builder will take care of this. It confirms that the structures are approved and habitable.
There are a number of properties in Canberra with unapproved structures but you should think very carefully about accepting unapproved structures. It will cost you to have them approved, some structures may be incapable of being approved, an insurance company may baulk at paying out on a claim relating to an unapproved structure, Banks ordinarily require a statement advising that there are no unapproved structures and the presence of unapproved structures can cause problems when you go to sell the property.
It often depends on a person’s risk appetite as to whether they will accept an unapproved structure and what the structure actually is. A small pergola might be one thing but a new bedroom and bathroom is a whole other concern.
A Compliance Certificate confirms a person has conformed with the conditions in the Crown Lease. There are often covenants in the Crown Lease requiring a person to start building within a period of time and complete the building within a period of time. If all is in order the Compliance Certificate is issued.
We find a lot of new houses have the Certificate of Occupancy and Use, people are excited to move in, and the Compliance Certificate doesn’t get issued. This is not insurmountable but can cause a bit of a flurry when going to sell a house. Critically Land Titles will not register a Transfer if there is no Compliance Certificate. That means Lawyers for a Buyer will check this very closely.
There are a number of things that Lawyers worry about. Unapproved structures, Certificates of Occupancy and Use, and Compliance Certificates are right up there. We need to check Contracts and searches very carefully to make sure all is in order.
We invite you to contact us to discuss this or other matters.
This is general information only and should not be relied upon as legal advice.
Published 20 November 2017.
