A Building Certificate is a certificate issued by Council stating it will not make certain Orders or take certain action under the Environmental Planning & Assessment Act 1979 or the Local Government Act 1993.
To Order or take proceedings for an Order to have the building (covered by the certificate) demolished, altered, added to or rebuilt, or to take proceedings in relation to any encroachment by the building onto land under the control of Council, for a period of seven (7) years.
WHY DO YOU NEED ONE?
The purpose of this certificate is to receive assurance from your Council that your building complies with all relevant legislation and standards.
A building is a temporary or permanent structure (not including manufactured homes, moveable dwellings or associated structures).
A Building Certificate DOES NOT guarantee all Buildings on the Land are Council approved, the certificate only ensures from the issue date of the Building Certificate that the Council will not require the Buildings or structures on land to be rectified or demolished.
WHEN TO APPLY?
A Building Certificate is usually applied for when purchasing and/or selling a property and is attached to the contract documents before settlement to make sure that what is being bought or sold is not going to be the subject of action by the council.
A Building Certificate is also commonly applied for in relation to re-financing loans associated with the property, or the regulation of building works that may have been undertaken without the appropriate approvals being issued by council’s Certifiers or a private Certifier.
However, it is important to note that the seller/vendor is not required to supply a Building Certificate under Vendor Disclosure* Legislation – it is up to the Purchaser and/or their Conveyancer to investigate and carry out due diligence to obtain such a Certificate and/or effect Title Insurance* to cover any potential risk to the Purchaser AFTER Settlement.
Under Vendor Disclosure Legislation the Vendor is warranting the property does not have an existing Council Order to rectify or demolish a Structure attached to the Land.
If the Purchaser does find out this warranty has been breached materially the Purchaser does have a right to rescind the Contract due to the breach of warranty in Contract.
If a Disclosure is made of a Council upgrade/ demolishing order in the Special Conditions of the Contract and the Purchaser signs the Contract, then the Purchaser cannot rescind or exit the Contract or take property as it is with a renegotiated settlement price via settlement adjustment.
HOW LONG DOES A BUILDING CERTIFICATE TAKE TO OBTAIN?
A Building Certificate from Council usually takes more than 6 weeks to be delivered.
Because settlement dates now vary and are often very fast in most cases the experienced Conveyancing Practitioner will engage Title Insurance* to cover the potential risk/s to a Purchaser AFTER Settlement.
Some Agents / Conveyancers try to arrange a Building Certificate before the property is listed and insert into the Contract particularly for higher priced homes, or attach a copy of the Title Insurance policy into the Contract for the potential purchaser to continue on with the Title Insurance via paying an additional premium at settlement.
Of interest to potential purchasers is that the Building Certificate only covers a 7 year period while a Title Insurance* policy will cover you, as the new owner and as long as you own the property, forever.
Title Insurance is a specialised type of insurance that provides coverage to the home-buyer for risks AFTER the date of Settlement.
There are two types of risk:
- Those that are identified during the conveyancing process (known risks), and
- Those that remain undiscovered during this process (unknown risks)
It’s all about managing your home ownership risks in the future for a one-time premium that provides protection forever / or the life of your ownership of the property insured.
SUBSCRIBE & DON'T MISS A SINGLE EPISODE OF MICHAEL YARDNEY'S PODCAST
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
PREFER TO SUBSCRIBE VIA EMAIL?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.