An elderly couple had owned their property for more than 40 years.  They decided they wanted to sell it and move into a retirement village.   The husband was a retired builder and, in the typical Kiwi fashion, had ‘tinkered’ around the property throughout the time they had owned it, carrying out various minor building works.

When the couple met with the real estate agent to sign the listing agreement, they were asked to disclose whether they had carried out any works on the property that may have required a Council permit or consent.

When a Vendor signs an Agreement for Sale and Purchase they give a number of warranties and undertakings in relation to the property.  This includes a warranty in relation to any works they have done, or permitted to be done, to the property.  This relates to works that have been carried out by the current owners, not previous owners. 

In particular, the Vendor warrants that:

  • A permit, resource, or building consent was obtained (if required);
  • To the Vendor’s knowledge the works were completed in compliance with those permits/consents, and
  • Where appropriate, a Code Compliance Certificate was issued for those works.

It can be extremely difficult for a Vendor to know whether, at the time the works were done, a Council permit/Code Compliance Certificate was required.  This can be especially difficult for people that have owned a property for a long period of time, as not only have the rules changed many times, but it can be hard to remember all of the works that have been carried out. 

A very common misconception is that something “didn’t require a permit back then”.  This is often incorrect. 

Another common misconception with exempt building work (that is, work that doesn’t require a building consent) is that if it did not require Council consent, it didn’t need to comply with all relevant sections of the Building Code.  This is incorrect, as it does still need to comply with the Building Code.

Options if you have carried out unconsented works

The couple have a number of options available to them, given they have carried out unconsented works.  Some of these are as follows:

List the property for sale as is

They could list the property for sale as is, but amend the Agreement for Sale and Purchase to exclude any unconsented works from the standard warranty that is included in the Agreement for Sale and Purchase.  However, this could raise difficulties with the sale, as it could discourage purchasers from purchasing the property and/or result  in lower offers being made by purchasers.  A prospective purchaser could also encounter difficulties in obtaining mortgage finance or insurance for the property, which could result in the purchaser being unable to purchase the property.

If works were completed prior to the Building Act being amended in 1991 – ‘The Building Permit Era’- obtain a Safe and Sanitary Assessment Report

Where unauthorised building work was carried out prior to 1 July 1992, there is no way for Council to retrospectively issue a building permit.  The couple could instead obtain a Safe and Sanitary Assessment Report from an independent third party.  They can provide this to any prospective purchaser and can also ask the Council to hold a copy on Council’s property file (however there is no guarantee they will agree to do this). 

This report serves as a record of the unauthorised work, the current condition of the unauthorised work, and an amended floor plan of the property.  This however does not override the warranty in the Agreement for Sale and Purchase, and disclosure should be made accordingly.

If works were completed after the Building Act being amended in 1991 – ‘The Building Consent Era’- obtain a Certificate of Acceptance…

Where unauthorised building work was carried out after 1 July 1992, again it is not possible to obtain a Code Compliance Certificate retrospectively.

The couple could however apply for a Certificate of Acceptance from the Council.  In order to obtain a Certificate of Acceptance they would need to supply evidence to the Council that the works meet the current Building Code.  It can be difficult to provide this evidence as often it requires inspections to have occurred throughout the carrying out of the works. 

It is important to note that the Building Code is more stringent now than it used to be, so the couple may be required to carry out additional works in order to meet the current Building Code.  This can be a time-consuming and expensive process. 

Taking advice prior to listing the property for sale is key...

If you have carried out works, and you are unsure as to whether Council consent was required, it is important to seek legal advice to clarify the situation BEFORE listing your property for sale.  This will minimise any issues that could arise during your sale, and could also alleviate any expensive legal claims against you for a breach of the key warranties. 

Your legal advisor will be able to assist you with ascertaining whether or not any works you have carried out would have required Council consent.  If you are unsure about whether any works needed consent, a little time spent working on this before offering your house for sale can avoid any complicated issues with your sale as well as potential legal proceedings against you in the future.