Bought a Place at Auction with Unapproved Mezzanine offices

[Deactivated] on 31/07/2019 - 17:01
Last edited 12/08/2019 - 12:52

I bought a small industrial unit at Auction 10 days ago.

  • It has an unapproved mezzanine office.
  • I knew it was unapproved, as did most people looking at the unit, but it scared off most people so i got it at bottom dollar.
  • It is in the contract of sale the the current owner get the works to code and has it approved at their cost.

Well just now Ive just received a copy of the professional building survey report (done 4 days before the Auction), i cannot possibly see a way all the work required to meet code and get approved is finished before settlement (30 days).

I am curious, if settlement comes & goes and its not finished, what is stopping the old owner from just doing a runner?

Has anyone had a similar scenario?

P.S. Yes of course i have a Conveyancer looking it all over.

Update 12.08.19: Conveyancer just told me settlement wont be proceeding 19th August (surprise surprise) due to Vendor not having works completed.

Home & Garden

Comments

  • HighAndDry on 31/07/2019 - 17:07
    +3

    It is in the contract of sale the the current owner get the works to code and has it approved at their cost.

    I am curious, if settlement comes & goes and its not finished, what is stopping the old owner from just doing a runner?

    Easiest solution, if the seller agrees, is that you just delay settlement until approval is obtained.

  • dcep on 31/07/2019 - 17:09

    did you put that as special conditions ? all works done and approved prior settlement ?

    • [Deactivated] on 31/07/2019 - 17:26

      Yeah its in the contract that its subject to seller complying.

      • dcep on 31/07/2019 - 17:34

        all good then, you can walk away with your deposit if works not complete by settlement

        • [Deactivated] on 31/07/2019 - 17:46

          I don't really want to, I bought this place interstate.

          Going to have to go back to find another one :(

          • dcep on 31/07/2019 - 17:51

            @[Deactivated]: negotiate then

            delay settlement as suggested above

            or

            hold portion of funds till works done

            • [Deactivated] on 31/07/2019 - 18:15

              @dcep: I might give the agent a call tomorrow to see how the seller is going & if he needs and extension, maybe its all under control?

  • serpserpserp on 31/07/2019 - 17:11
    -2

    Maybe get an actual lawyer to look at it.

    • Pikaloo on 31/07/2019 - 17:33

      at the unit?

      • serpserpserp on 31/07/2019 - 17:50

        Advice on his rights under contract.

        • [Deactivated] on 31/07/2019 - 18:32

          OZB is not a law firm? since when.

          • kiitos on 01/08/2019 - 08:07

            @[Deactivated]: Yeah, pretty sure we've all seen the ads for "Brodens Lawyers" on TV, right?

            And their LLB is from Udemy,!

  • cheaplee on 31/07/2019 - 18:14

    Balls in your court, action is not. It will get done and you'll be happy or it won't and contact will fall through.

    Other option is they don't do the work and you buy it anyway, but that is your call.

  • 87percent on 31/07/2019 - 18:17
    +1

    My guess is seller will delay, delay, delay until you ask to void the contract, and then relists for more money

    • [Deactivated] on 31/07/2019 - 18:26

      Why did they sell in the first place?

      They had the report before they sold, id say they are still liable for real estate agents cancellation fees in this case.

      • 87percent on 31/07/2019 - 18:27

        Everyone thinks their house will sell way over reserve on auction day

        • [Deactivated] on 31/07/2019 - 19:02

          https://forums.whirlpool.net.au/thread/38vrzz83?p=13

          Seems they have no recourse to back out though, only i can if they don't meet the contract.

          • onetwothreefour on 01/08/2019 - 06:25
            +1

            @[Deactivated]: He didn't say they would back out he said you would back out. What are you going to do if the owner doesn't have the work complete by settlement then still doesn't have it complete in 6 months time?

            • [Deactivated] on 01/08/2019 - 11:26

              @onetwothreefour: Well that's sorta why im here, Was hoping i could maybe ask the conveyancer to put terms in that 50% of total value held in trust account until all works complete, money can be used for rectification works if needed.

              • HighAndDry on 01/08/2019 - 11:45
                +2

                @[Deactivated]:

                Was hoping i could maybe ask the conveyancer to

                Technically can't really change terms after the contract's signed and exchanged. Also - yes, you should be asking the conveyancer and not randoms on OzB haha.

                • onetwothreefour on 01/08/2019 - 11:50

                  @HighAndDry: Agree, this is why you have a conveyancer.

                  • [Deactivated] on 01/08/2019 - 13:10

                    @onetwothreefour: I also agree, but i wanted to ask the dumb questions here first to see if they were indeed dumb :P

    • HighAndDry on 01/08/2019 - 11:44

      Property is one of the few areas of law where if the buyer sues, you can commonly get specific performance instead of just monetary compensation (refund).

  • Melb69 on 31/07/2019 - 18:22

    Get legal advice. I would also just get an independent building inspection done to ensure all the works are compliant. In Vic the building surveyors are independent and no one is checking. Hence why we now have issues with cladding. The seller may be using their own builders mates and building surveyors.

    • [Deactivated] on 31/07/2019 - 18:27

      The report is very thorough and is asking for all sorts of conformance reports.

      If their 'mate' has done this report they might not be mates any more!

      • ihbh on 31/07/2019 - 18:59

        Did you get the report before auction?

        • [Deactivated] on 31/07/2019 - 19:04

          No, but i knew whatever was in it they had to rectify.

          Everything looked structurally sound to me https://bit.ly/2Nmd2EP

          • ihbh on 31/07/2019 - 19:06

            @[Deactivated]: So the vendor/agent got one for all bidders to share (to avoid wasting double ups)?

            • [Deactivated] on 31/07/2019 - 19:09

              @ihbh: No, the building survey report was not provided prior to auction, i got it today.

      • Melb69 on 31/07/2019 - 19:16

        I meant that the works in that report should also be checked that they are actually completed and to the code.

        • [Deactivated] on 31/07/2019 - 19:27

          Provide to sanitary Braille and tactile signage incorporating the international symbol of access or deafness.

          This is the sort of stuff in the report they need to rectify, i think ill be pretty happy if everything is fixed and this surveyor / council signs it off.

          • TheBilly on 31/07/2019 - 20:34

            @[Deactivated]: Give a bigger list on what the report says because that is a complete non issue and can be sorted in a couple days. I can comment on difficulty to rectify as its my field.

            • Melb69 on 01/08/2019 - 08:17

              @TheBilly: Getting approval on the mezzanine would take a while to get through Council planning and then if the works of the mezzanine aren't confirmed structurally and certified then that could delay things. As for signage. That's a trip to the store and sticking it up - minor items that would not delay settlement.

              • [Deactivated] on 01/08/2019 - 11:29

                @Melb69: Report is 8 pages and 23 items, Ive shortened to significant points.

                *Planning permit application for the building works
                *Provide a set of structural plans for the works.
                *Natural or mechanical ventilation maybe required to the newly formed mezzanine area
                *Electrical Certificate
                *Plumbing certificate
                *Engineers design & certificate
                *Provide a list the linings, materials and assemblies
                *Provide a set of structural plans for the works
                *Energy Report
                *Slip report for stairs
                *Tanking certificate (upstairs bathroom)
                *Glazing certificate (upstairs bathroom)

                • Melb69 on 01/08/2019 - 12:05
                  +1

                  @[Deactivated]: *Planning permit application for the building works. - 6-8 week min.
                  *Provide a set of structural plans for the works. - If they haven't been prepared that's at least a 2-3 weeks.
                  *Natural or mechanical ventilation maybe required to the newly formed mezzanine area - If not at least 5% openable windows then mechanical ventilation will be required.
                  *Electrical Certificate - By Electrician.
                  *Plumbing certificate By Plumber.
                  *Engineers design & certificate. By engineer assuming they worked of some drawings. If not then they will have to find some one to inspect and certify it.
                  *Provide a list the linings, materials and assemblies. Should be able to be listed. Assuming the works were recorded.
                  *Provide a set of structural plans for the works. Assume non prepared. Will be as builts assuming the engineer is ok with what is built.
                  *Energy Report. By energy rater. They need drawings. 1-2 weeks.
                  *Slip report for stairs. Floor finish type?
                  *Tanking certificate (upstairs bathroom) . This could be a difficult one to get if no inspections or pictures taken previously before tiles.vinyl floor finishes. You could be up for re-doing it later if it leaks.
                  *Glazing certificate (upstairs bathroom). Maybe safety glass here. Just needs to be checked and confirmed to AS.

                • TheBilly on 01/08/2019 - 13:14
                  +1

                  @[Deactivated]: That is significant, while it is possible to do. The report is effectively calling for all the certification you will need to show on a completely new built project.

              • TheBilly on 01/08/2019 - 13:11

                @Melb69: Exactly

                • [Deactivated] on 01/08/2019 - 13:25

                  @TheBilly: Yeah, he did say it was built professionally by a builder, so maybe he has a lot of this already?

                  Have tried to get a hold of RE agent but in a meeting, will try again later.

                  • HighAndDry on 01/08/2019 - 13:45

                    @[Deactivated]:

                    Yeah, he did say it was built professionally by a builder, so maybe he has a lot of this already?

                    The main issue is the uncertainty. Most of it is providing documentation to the council, not necessarily doing any work. Biggest factor may well be council processing timeframes than anything else.

                    • [Deactivated] on 02/08/2019 - 16:24
                      +1

                      @HighAndDry: I'm going to sit tight for now and try not to stress lol.

                      Review in a couple weeks when closer to settlement, maybe it'll all be magically approved.

                      • [Deactivated] on 12/08/2019 - 12:52

                        @[Deactivated]: Update 12.08.19: Conveyancer just told me settlement wont be proceeding 19th August (surprise surprise) due to Vendor not having works completed.

  • chumlee on 01/08/2019 - 08:13

    Find out how much it will cost to get it to code and offer to deduct from purchase price and then get works done

    • [Deactivated] on 01/08/2019 - 11:29

      Take out your headphones Chumlee!

  • 87percent on 01/08/2019 - 11:37

    how are you paying for it? if its a bank loan, i would think that they wouldn't give you the money based on the unapproved works

  • NigelPearson on 01/08/2019 - 20:45

    Hi Fincky. I assume this is one unit in a block which is zoned as IN1 or IN2.

    1) Almost every unit I have looked at has "illegal" mezzanines.

    2) Strata doesn't care. The mezz doesn't increase your fees - you pay based on the ground floor area (including car spaces). Half your neighbours probably have illegal mezzes.

    3) Council doesn't care. It is just a big concrete box to them. If a council inspector ever complains, you just knock the office down and lose some flexibility or rental income.

    I guess my question is, what does it matter? You got it at "bottom dollar", and you have a better unit. Either you want it as-is, and you settle, or you delay and risk whatever their solicitor tries to do. Unless someone can point to planning or council doco that explains fines or similar rulings in the past, I see no downsides !!!

    • [Deactivated] on 02/08/2019 - 16:14

      A newly formed mezzanine area of building is the subject of this preliminary inspection report to address a council issued building notice.

      Quote from the building survey report, i don't think it can slip under the radar.

      This mezzanine is required as it will function as our work office & meeting room & lunch room etc etc. TO knock it down and rebuild is not a hassle or expense i want, id rather walk away.

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