When should you order a Building Certificate? Is it different to a Building Report? What does it tell you about a property? If you are looking to buy a home I answer these questions and more as part of my pre-purchase property inspection video series.
Watch now: https://youtu.be/0FYr0qcdlrE
TRANSCRIPT:
This is one of a series of videos I will be presenting on buying a property from the perspective of the purchaser setting out small-ish chunks of the legal process involved, which is also known as “conveyancing”. Today I’m going to talk about Building Certificates, which is one of the property inspections your lawyer will typically recommend you obtain before exchange of contracts i.e. before you enter the contract to purchase the property, which we also call the pre-purchase period. I say ‘typically’ because I will be referring to a standard type of property purchase, so if additional complications are evident after reviewing the contract, additional property reports or certificates may also be recommended by your lawyer, depending on the circumstances. Now, in Australia, the laws around property purchases are state-specific so if you are interested in buying a property located in NSW, this video is for you!
The first point to note is that this video series deals with residential property only, such as a house, unit or block of land and not with any type of commercial property. Also, when I refer to exchange of contracts from now on I will be using the abbreviation ‘exchange’ for ease of reference.
If you would like to know more about exchange and the pre-exchange period generally, I have linked my videos on these in the description box below.
As always please hit “SUBSCRIBE” if you like this type of content and give a thumbs up if you find the information useful – I’ll be posting a new video every week.
A quick disclaimer that my videos are general and informational in nature only. They are not intended as legal advice, nor should you rely on them as such. Please see the full disclaimer in the description box below.
Now, lawyers typically recommend 4 types of pre-purchase property inspections be obtained before exchange, depending on the type of property you are buying. Some or all of these reports/certificate may be provided to you by the seller, known as the vendor – which may mean you won’t need to consider applying for them yourself, saving you both time and money. The 4 searches are:
(i) Building Report
(ii) Pest Report
(iv) Building Certificate
(v) Survey Report with diagram.
This video will focus on the Building Certificate, which is not the same as a Building Report – they are very different things (I’ve got a video specifically on Building Reports, which is linked below).
So what is a building certificate and should you consider obtaining one?
Essentially, a Building Certificate is a document issued by Council relating the buildings or structures on a property and if the council issues a Building Certificate it means that the property has cleared their inspection and is not going to be the subject of any action or order by the Council.
Firstly, the contract may contain actually contain a building certificate which was obtained by the seller (who is known as the vendor). If so it saves you from applying for one but it is important to check the date of the building certificate to make sure it’s current.
If you do decide to apply yourself as a prospective purchaser, an application to council for a building certificate must be accompanied by a current survey report. (I will discuss what a survey report is in a later video). Something to note is that if the contract contains a building certificate obtained by the vendor, then it usually also contains the survey report the vendor used to apply for the building certificate.
In a nutshell, when either you or the vendor makes an application to the council for a building certificate, the council will only issue one when it is satisfied that it approves (or has approved) of the buildings on the property.
What does this mean? It means that the building certificate generally confirms that Council will not issue the owner of the property (and that would be you if you buy the property) with an order for the repair, demolition, alteration, addition or rebuilding of any building on the property.
When you make an application for a building certificate, a council inspector attends the property and inspects it to ensure that all the buildings on it comply with council approval.
For example, let’s say that the property you are interested in has a new extension on the back or a covered pergola or shed, etc.
A building certificate will let you know whether or not the building extension was approved by council. Once the council inspects the property in question however, they may discover other things with the property which they want rectified e.g. they may find that the height of steps which were built 70 years ago don’t comply with today’s building requirements and they may issue a rectification order instead, which will need to be complied with…
So, there are both benefits and risks involved with applying for a building certificate that you’ll need to weigh up before making your decision.
Another thing to be mindful of though is that the building certificate is only valid for 7 years and it only covers the matters which were in existence or occurred at the date the building certificate was issued.
How could that effect you in practice?
Well if you bought a property that had a current building certificate at the date you bought it, and you later decide to sell it (i.e. after 7 years) you could not rely on the building certificate you had from the date of purchase.
You (or any potential purchaser) could apply for a new building certificate and the council inspector who inspects the property at this time may find that some of the buildings now don’t comply with new building requirements (even though these same buildings were passed in the previous building certificate)…
And that is all I have for you today on building certificates. As always – please remember to “SUBSCRIBE” and hit the “Like” button if you liked this video, please share it and if you’d like to make an appointment to engage our services, please follow the link in the description box to contact me. If you have any topics you’d like me to address in future videos, please leave a comment in the comment section as I’d love to hear from you. I hope you found this video helpful and thank you for watching.