Putting your property on the market can be a stressful time for homeowners, involving so much more than setting the right price, but a pre-sale legal warrant of fitness can head off issues before they arise.
From cross-leased properties with added garages that don’t have neighbours’ consent, to missing final builder’s inspections that fail to sign-off a home, and builder’s reports that list multiple issues to be fixed, there are a myriad of potential pitfalls for vendors to tidy up before listing.
A pre-sale legal warrant of fitness
Carolyn Brown of CT Legal told our Lodge Home Truths podcast a pre-sale legal warrant of fitness can take the headaches out of the sale and purchase process.
Carolyn says many vendors don’t uncover legal issues with their property until they have an offer on their property and in some cases the surprises can be so dire, they affect the sale of their homes.
A pre-sale warrant of fitness will go through and work out if the client has obtained all the necessary consents. Checks include whether issues like land covenants are being complied with, and assessing whether there is basic maintenance work that needs to be fixed in the house. It will also check vendors have information and warranties on things like rewiring or other work done on the house and covers legal obligations under the sale and purchase contract.
“If vendors are at the point where they have an offer often, they've already moved in their heads. To have curve balls pop up at the last minute is very traumatic for most people,” says Lodge Residential Sales Consultant Sue Hall.
Understand your timeframes
One of the first things vendors need to consider is the time frames they are working to so they can meet all their contractual obligations, whether they are selling to purchase a new property or selling a rental.
“We don't want to be in a situation where vendors are buying a new property and settling their purchase one week before they have finalised their sale,” says Carolyn.
In cases like that banks can consider bridging finance, but it’s not recommended as a first option.
If the property is a rental, vendors also need to allow sufficient time for tenants to move out and have space in between the new owners taking possession to allow any issues with the property to be fixed.
“You don’t want tenants moving out on the settlement date. You need to have a few days there just in case there's any problems,” says Carolyn.
The legal pitfalls
Cross-leased properties can pose all sorts of challenges, particularly if structures have been built on the land but have not obtained neighbours’ consent.
“When you have underlying land, there might be four or more different people and all those different owners have to sign off on work. If it’s flats, the underlying flats plan needs to be amended. And that's a costly and lengthy process and owners can be hard to track down,” says Carolyn.
Sometimes people do work to a property and don’t obtain council consent. If the house has changed ownership a few times, sometimes it’s only when looking at the council drawings it becomes clear unconsented alterations have been made.
Tiled bathrooms were a common issue, says Carolyn.
“There's a misconception that in a tiled bathroom if you replace a shower with a tiled shower that it doesn't need building consent which is incorrect,” says Carolyn.
In more challenging circumstances vendors might discover the whole house didn’t undergo a final building inspection to receive code of compliance.
“Often, it's things like the garage is not actually signed off or occasionally we find it's the house and you never want to see it's the house. But that does happen as well. But the sooner we pick up on those issues, then at least we can work out a plan for the client,” says Carolyn.
Sometimes the issues for purchasers can also arise with building maintenance and builders’ reports detailing many issues to fix.
“It might be just a simple thing like ensuring that the hot water cylinder is in place properly and is braced,” says Sue.
The sale process goes smoother if you don't have a purchaser balking at a big list of items that seem drastic, but are just maintenance items and involve a bit of time, says Sue.
That goes for checking asbestos and having warranties for any work done on the property too.
“If clients have packed up, they often can’t find warranties and they don't have the time to give us that information that we need to ensure that the process goes smoothly,” says Carolyn.
If work was undertaken after 1992, property owners can apply for a certificate of acceptance from the council, which is like a retrospective building consent but it’s a process that takes time, says Carolyn.
“If you've got your auction coming up in two weeks and suddenly, we discover that the extension is not consented, let alone had an inspection, there's just no possibility of getting that sorted in time,” says Carolyn.
She says this is what makes a pre-sale warrant of fitness so important. “We can check off all the potential issues before they arise.”