"Unapproved Structures" in Victoria: Your Critical Buyer's Guide to Property Contract Risks
1. Plain English Definition
"Unapproved Structures" means any building work, extensions, or modifications on a property that were built without the necessary permits or approvals from the local Victorian council. This can include anything from a new deck, carport, or shed to internal renovations or even a granny flat, and can lead to significant problems for a new owner.
2. The Danger Zone: Buyer's Risk
- Demolition orders: The local council in Victoria can issue an order for the demolition or removal of unapproved structures, leaving the buyer with substantial costs, potentially thousands of dollars, and a property that no longer meets their needs.
- Fines and penalties: As the new owner, you could face hefty fines from the council for non-compliance, which can range from hundreds to tens of thousands of dollars, depending on the severity and nature of the unapproved work, a major "buyer's risk" in any Victoria property contract.
- Insurance issues: Most insurance policies will not cover damage to or caused by unapproved structures, leaving you financially exposed if there's a fire, storm, or other incident involving the non-compliant parts of the property.
- Decreased property value: Discovering unapproved structures during a sale can significantly reduce the property's market value, as future buyers will also inherit the associated risks and potential costs.
- Difficulty selling: Future attempts to sell the property may be hindered, as lenders are often hesitant to finance properties with significant unapproved structures, and savvy buyers will be wary, impacting your ability to exit the investment.
- Legal liabilities: In the event of injury or damage caused by a defect in an unapproved structure, the new owner could be held legally liable, leading to expensive lawsuits.
- Retroactive approval costs: Obtaining retrospective approval can be a lengthy, complex, and expensive process, involving architectural plans, engineering reports, and council fees, often costing more than if the work was approved initially. This is a key consideration within the Section 32 / REIV contract.
4. Real-Life Victoria Scenario
Wei, a first-home buyer from Box Hill, was thrilled to purchase a charming house in Blackburn. The Section 32 / REIV contract didn't explicitly mention any issues with the structures. However, after settlement, the local council notified him that the spacious rear deck and pergola were built without permits. Wei faced a choice: pay over $15,000 for retrospective approvals and potential modifications to meet current building codes, or demolish the structures at his own expense. He learned the hard way that understanding "Unapproved Structures" is crucial to avoid unexpected financial burdens and ensure peace of mind with a Victoria property contract.