Understanding Unapproved Structures in your Australian Capital Territory Property Contract
Plain English Definition
"Unapproved Structures" means any building, extension, or permanent modification on a property that was constructed without the required development approval (DA) or building approval (BA) from the ACT Planning and Land Authority. In the context of an ACT Contract, this refers to structures that do not comply with the Planning and Development Act 2007 or the Building Act 2004, representing a significant legal and financial liability for the new owner.
The Danger Zone: Buyer's Risk
- Demolition Orders: The ACT Planning and Land Authority has the power to issue rectification or demolition orders for any structure built without approval, such as unapproved decks, pergolas, or garage conversions, often at the buyer's expense.
- Insurance Voids: Most Australian insurance providers will refuse to cover claims related to unapproved works, meaning if an unapproved extension causes a fire or collapses, you may be forced to pay for all damages out of pocket.
- Lender Complications: Banks and mortgage lenders may lower their valuation of the property if they identify unapproved works, which can lead to a shortfall in funds and a high buyer's risk of failing to settle on time.
- Retrospective Approval Costs: To legalise an existing structure, you may need to pay thousands of dollars for "as-built" plans from a draftsman, structural engineering reports, and government application fees with no guarantee of approval.
- Safety and Liability: Unapproved structures frequently bypass critical safety inspections for electrical wiring and structural integrity, posing a physical risk to occupants and a legal liability risk to the owner.
- Resale Devaluation: When you eventually sell the property, future purchasers will likely discover the lack of approval during their due diligence, leading to price renegotiations or the loss of a sale.
- Encroachment Issues: Unapproved structures are often built too close to boundaries or over easements, which can lead to disputes with the ACT Government or neighbours that are costly to resolve.
Real-Life Australian Capital Territory Scenario
Li, an investor from Sydney, purchased a suburban house in Belconnen, Canberra, which featured a large, enclosed sunroom. After the settlement of the ACT Contract, Li discovered the sunroom was an unapproved structure that did not appear on the official building file. The ACT Government issued a notice requiring the structure to be brought up to current building standards, which cost Li $22,000 in structural reinforcements and certification fees. Li learned that while the sunroom added aesthetic value, its lack of legal status created a massive financial burden. Always verify the building file against the physical state of the property before waiving your rescission rights.