Bought a Unit at Auction - Wanna Get out of The Contract Is It Possible?

Hi Guys,

Guys I need help here. If anyone can please share there knowledge in regards to my issue then it will be big help. I know I screwed up big time.

I bought a unit at auction but when the bank did the valuation that's what they said

"As discussed, the subject property shows obvious signs of non-compliant building codes issues (ceiling height). We are aware property has been registered and have investigated further.

The property was certified by a private certifier by the name of Anthony Allen, who we have confirmed was reprimanded on 03/05/2016 on a separate issue regarding a strata development.

This is very concerning and affects the certifiers credibility. We are not willing to accept this certifiers recommendations and request cancellation of report.

As per my Solicitor Conveyancer:

This is the email I received from my solicitor Conveyancer which will explain everything in detail.

I understand from Kathy from —- bank that the findings of the bank's valuer about the unit you have purchased does not comply with the BCA due to the ceiling height being 1.8 meters from floor to ceiling and therefore, due to the bank's valuer assessment, your loan application has been declined.

Unfortunately, you have exchanged contracts under auction conditions and under the contract must complete the contract upon the vendor's solicitor serving notice of registration and an occupation certificate.

We were notified by the agent that the strata plan was registered as Strata Plan —— on the 18 November 2016.

To date, the vendor's solicitor has not formally served me with notice of registration nor the occupation certificate.

I note your instructions that you will continue to apply for another loan to secure adequate finance to purchase the property and at the same time, you wish for me to obtain more information about the original development application of the building, so we can determine what was approved by council. This morning I have sent to council an Informal Access Application under council's Government Information Public Access (GIPA) to obtain copies of the original Development Approval and other documentation that may assist.

I note that you have also instructed me to obtain a Building Certificate, a copy of the application is attached herein.

In order to terminate the Contract, we must determine that the contract is a latent defect that is a fault in the property that could not have been discovered by a reasonably thorough inspection before the contract was entered into. This can be challenging as if you conducted a building inspection prior to the auction, the issues may have been discovered before you purchased the property. Furthermore, terminating the Contract will lead to court action and you will need to consult a qualified solicitor who has experience in these sort of matters.

The problem here is that if we are served with an Occupation Certificate then you must complete the contract as the certificate certifies that the property as being fit for habitable occupation and further, the vendor will rely on the contract to enforce your obligations under the contract. As far as the vendor is concerned, he would say that he went through the right channels to obtain strata subdivision and obtain an occupation certificate.

The whole process in trying to prove that the property is not a unit but a storage space will take time as you will need to prove that the error or misconduct or failure is on the part of the certifier or the vendor.

If you purchase the Building Certificate perhaps we can try to prove that the property sold is not a unit but a storage space and therefore, the contract is misleading on the part of the vendor as you did not get what you bargained for, that is, a unit. The other alternative is that if we establish that it is a storage space, that the contract price reflect the true value of a storage space and therefore, the price should be reduced, however, this alternative is not recommended as you may not be able to obtain a loan for a storage space.

The other alternative is to approach the private certifier and ask him to explain what evidence he has to deem Lot 10 as being a unit.

I highly recommend that you seek the advice's of a qualified solicitor to discuss your legal rights should you wish to terminate the Contract.

If someone can please explain what can be done here then it will be big help. I don't have enough knowledge about all this stuff but just wondering anyone think if there's any chances for me to win this case if i go to the court?

Thanking you all in advance.

Regards and best wishes


  • +83

    Your Solicitor has recommended you to "consult a qualified solicitor who has experience in these sort of matters".
    Hope someone from OZB will be able to help you!…

    • +1

      Thanks mate..

      • +4

        This is the problem and hassle with auctions - you MUST get the bank to value BEFORE the auction, not after.

        Just because the bank says they will lend you a certain amount of money, doesn't mean they actually will.

        You must go through the hassle of getting them to do this valuation before you bid and then they give you unconditional approval to bid.

        This is when a broker is useful. Get a broker to find someone to take on the loan for you.

        • +15

          Most banks will not give you a unconditional approval. They will give you a conditional approval, but you don't know if they will loan you the money until settlement date. This is why you typically have part of the purchase contract subject to financing and or inspection. Buying at a auction is very risky as the odds are heavy in favor of the owner than the buyer and auction house.

        • +2

          @doodo477: this is very scary, I don't think I will ever buy at auction

        • -1

          @fm: Like any translation know what you're getting into, and your right and responsibility's. Auctions can be a great place to pick up a bargain but the risk vs reward is heavily in favor of the seller. Like anything do your homework before hand, go in knowing how much you will spend, there is a reason why real estate agents love auctions.

        • +5

          good luck getting something in Melbourne without auction as anything in demand usually goes to auction. That's one of the reasons agents love auction as contract is unconditional (more likely to get their commission)

        • +1

          @thechemist: I have not seen any auction in Melbourne where house is sold ($380k for OP)for less than their expected price guide ($440k-$480k)…….

        • +3

          @pyramid: I don't know why people follow agents quote. Being one of your biggest investments in your life time you should have done your research and gone to many auctions before hand to have a handle on values of properties. That's why I don't pay much attention to median prices as well as in some suburbs land prices are double from one part of a suburb to the other end (e.g. Gascoine Estate in Malvern East compared to Chadstone shopping centre Malvern East)

          I don't get it when people don't do their research with big purchases especially people on Ozbargain (I have seen people here spend a lot of time working out ways to save 50 cents).

        • +4

          @thechemist: you can't trust an agent as far as you can throw them, price guides have been BS for years. The goal of the agent is just to pack the room so that if it does sell or gets passed in the agent can put pressure on the seller to sell for less, by saying "we had a room full of people and it didn't sell so you have to lower your pric"

        • @fm:
          Auctions aren't bad. Keep in mind:
          - A valuation completed by your bank before you bid. This way you know how much your bank values the house at. This cost me $250 with my bank. I don't think another evaluation is needed if you end up buying the house.
          - Get your own private building inspection done. It may be expensive but the peace of mind is worth it.
          - Do your homework and find out as much as you can about the house.

          You should do the above when buying a house for sale anyway.
          Any more tips we can add to the list?

        • @superseijin: This is interesting.

          Now that you have a bank valuation before you bid. What happens when bidding goes beyond your bank valuation ?

        • +3

          @tomleonhart: I would assume you don't buy it?

          As a general rule, I aim to pay less than or equal to what something is worth, not more than. It's one of the reasons I frequent this website.

        • @sparkanum: You would think that's the case.

          Every week we see news about people paying 200k - 500k over reserve, I wouldn't think those people who buy property at those price would pay the extra price in cash.

          Bank valuation usually comes back at the price you pay for the property. That's just how it is. Unless something really wrong with the place ie in this case 1.8 metres tall ceiling.

        • @doodo477: How would you pick up a bargain at an auction? Doesn't the vendor set the reserve at the price they will only sell at, and if you don't reach it you can't force the vendor to sell it to you for less, and the auctioneer will just put in stupid vendor bids until it reaches that point anyway!

        • @doodo477: I was using St George and I'd get them to value the property before the auction. I wouldn't go to auction without that valuation.

          They would give me unconditional approval for an amount of money based on the valuation.

          They would always ASK me what I was willing to pay for the property and THAT was the guide they used - ie., was it worth what I was willing to pay? Most houses were over - ie., they had no problem with the price I was willing to pay. One was under the price I knew it would sell for. I then had to work out their 80% contribution based on that valuation and not go over that including the cash I had on hand.

          People fall over in auctions because they get conditional approval for a certain amount of money only. You MUST get the valuation pre-auction so you know exactly where you stand going in.

        • +1

          @tomleonhart: Then you should know that you have to pay more than 20% down payment. Say bank valued house at $500k, bank will lend you 80% ($400k). If you bid $600k, bank still lend you $400k, and now you have to pay $200k as down payment.

        • @nathanlim: or you can go to another bank after you win the auction and get them to value at house and hopefully it comes back at the price you paid for. Then borrowing accordingly.

          Provided you can afford it of course.

        • @tomleonhart: Yes, the key word is "hopefully". Most bank are quite conservative now, and they usually use a pool of external valuer. So don't pin high hope that the valuation will differ by a lot. $20k-30k difference at most.

        • @doodo477: Thats true.. I spoke to one of the agent and he is trying to get me a loan without inspection of the property for valuation. Lets hope for the best.. Ill be paying shit interest rate though.. but for now its the best option for me i guess.. Thank you for your input..

        • @fm: Yes it is :(

        • +4

          @Imdad: OMG Really?? DO NOT BUY this place!!!
          You are speaking to the dodgy agent!? This house I assume is taht 10/31 Harris Street one. It is full dodgy!!

        • @doodo477: You are right… As long as you you are smart enough and know everything its all good.. my case was different :(

        • @tomleonhart:

          I never got a concrete answer from the bank on that. I went 5k over the valuation from the bank. The bank did mention that the risk of the property would go up if I paid a lot more than their valuation. Perhaps they have a risk-based calculation on if they will give you the loan or not?

        • +1


          How do you pick up a bargain at an auction?

          • Usually it's when the auction doesn't meet the reserve. You negotiate the final bid with the seller and they see if there is room for you to move. The seller then has a choice to sell or not. The bargain usually happens when the seller really has to sell for some reason or another and having the house on the market longer would not be worth it.
        • +2

          I paid $1.450m at auction for an old house for what was "land value". The bank sent out a total of 6 valuers before determining the true valuation was $1.44675m. Apparently I overpaid $3250. How on earth they figured that out and why it took 6 of them I don't know.

        • @superseijin:

          Here in Perth, we don't seem to do auctions so much as you do over east, and it sounds like thats a very good thing to me. Having to get valuations and inspections before even bidding on a place you might not get..what a joke!

        • @incognitoXD:

          Yeah it's a joke. Sometimes they don't even get out of the car I heard.

        • +1

          @lainey13: For a bargain at a auction? Get a valuation done on the property like others here have suggested, then get a unconditional loan guarantee from you bank (Bank will tend to require you have LVR less than 80%). Go to the auction, and bid bellow your valuation. If you're the winning bidder and the reserve hasn't been met, the auctioneer will take you and the seller to a private room where they will give you a second chance to make a offer for the property. Failing this, the property is re-auctioned. On the other hand if you're happy sign the contract and pay the 10% deposit. Contact your bank and follow through with the remainder of the financing. Depending on the state their will be a statutory cooling off period of 7 business days for you and the seller.

          During settlement if the seller decides to opt out of the sale of the property. Contact your solicitor and put together a case to sue for the cost all expenses.

          You're hoping the seller real-estate agent hasn't done his/her homework and wants a quick sale, and has sweet talked the seller.

          Though nothing stops you from bypassing the whole thing and doing a Title search with your LTO (Land Title Office) of the property and contacting the seller directly and making a offer over the phone and getting your solicitor to write up the purchase contract.

        • On a sarcastic note, Imdad means "cry for help" in some languages.

          Anyway, I feel for you mate, hope all will be fine.

        • @doodo477:What does a title cost?

        • @tunzafun001: thread necro much?

      • Hi Imdad

        I feel for you mate.

        Do you mind me asking what state did you purchase this unit?

        I wouldn't waste time and go straight to a qualified solicitor without any further delay.

        Either way, I believe that you will be subjected to spend money on advice or lose 10% for cancellation of Contract (from what I can remember).

        Good luck.


        • -2

          Anyone else notice how some ppl seem to reply to the first comment just to get their comment at the front?

          (ie @vinni9284 #otherThreadOnQueueJumpers :) ;) )

        • +1


          My bad. New user and only posted a few comments.
          Post at base of queue :-) . Got it.

        • @vinni9284:

          All good I'm not really emo about it :)

        • Its in NSW .. Thanks mate really appreciate…

      • +3

        As a solicitor I can justly say that you are compounding your initial (profanity) even more by asking random OZB members to give you legal advice.

        Do you want to lose 38K and potentially become bankrupt because you don't know shit?

        Spend 10k on getting legal advice to possibly get you out of losing this sum and more.


    • Hopefully OP is getting his/her current advice for free ☺

      • I wish ..

    • +13

      Sarcasm Police….I think the op missed (like the 1.8m ceiling) the sarcasm.

    • +1

      As someone who's watched The Castle more then one I am an expert on these things.

      Its Marbo, its the vibe.

      • +6

        Mabo… Just want to say how disenchanted I am…

    • +7

      Hi mate
      If you are getting nowhere with the advice on ozb. Please contact a real law professional… Here is a link

  • +14

    I am not quiet understand here, how can a unit have ceiling height of 1.8 Meter? could you share the link to the property?

    • +10

      Indeed. I'm 1.9, so already ruled out, but unless you're a midget, how could it possibly feel right.

      • -4

        You are right - The reason i didnt look at it much is bcz its already been rented and ppl r living there

        • +10

          you buying a property and didn't look at it much…..

          Sounds like you should not worry about the payment…

        • +1


          "i didnt look at it much"

          <——— Well there Sir is the problem. The ceiling height was not a hidden issue, or disguised or latent. If you'd inspected it you would have seen that the ceiling height was just 1.8m. You don't need a building certificate to tell you that…..

        • +1

          @nickster9999: Googling will show pictures of the place prior to the renovation. It was pretty bad!!

      • -5

        PC Police…..'midget' is considered a rather derogatory term within the Little Person community.

        • +1

          Define 'little'.

        • +6

          @arcticmonkey: Smaller than big.

        • +6

          "PC" is considered derogatory. It's "Socially Aware" or "Macintosh Challenged". :p~

        • +1

          Yeah I've heard in some countries the community is largely OK with the term midget.. Well, not literally 'largely' but you get my drift.

          Karl pilkington once put a challenge out that you'd never see a Chinese homeless in the uk.. Someone sent in a photo of a 'Chinese midget homeless'.. So perhaps op may not be too bad off if there is a community of midget homeless?

          Seriously tho, I have a short friend who doesn't mind the term but others may.. And I don't seek to offend.

        • +2

          Thats just picking at little things!

        • But what are they going to do about it?

        • Why do I get -5 for this? I'm just standing up for the little persons.

      • -1

        I don't think you can say that anymore. Someone will get offended.

        • +3

          Can't say anything anymore.

        • @tomsco: Have to agree. These days far too many people take offense to a lot of things. Sometimes people just need to take their daily dose of concrete and harden the (profanity) up.

        • +1

          @tomsco: I'm offended now !

    • +3

      Is the suburb Baggins End ?

    • I couldn't even fit in the unit - I'm 195cm tall!

  • +2

    Hi there, I wish i could but its goona be too open … The reason is it use to be a garage and they converted into a unit ill try to share the pics if i can.. Thanks for your comment though..

    • +2

      Is it a very old garage? 1.8m is tiny.

    • +1

      What is the total size of the garage and how much you won in Auction and is there anyone in the Auction?

      • +1

        I won for 380k and yes a very old building its 125sqm - yes there were 2 more for bidding

        • -2

          2 more bidders? Singushali & co.?

        • Or maybe try and find those two bidders and find out what they were planning to do.

  • +1

    1.8 meters?

    • Yes :( the property is already rent out and getting a good return - i though everything is fine with it - Agent told me its because they change the carpet to the wooden floor so that's the reason its a bit low - also it was recommend by one of friend from real estate agent so i didn't bother to look at the contract of sale and stuff like that

      • +28

        "that's the reason its a bit low"

        1.8M isn't a bit low. That's less than the average male. You literally can't stand up in that place!

        • +8

          You are right.. I need to know if i can go to court with this as its not a proper unit and not with Australian Council Std -

        • +5

          And good luck trying to shampoo your head.

        • @Imdad: lol if not are you able to sue in 6 years for your newly bent back rofl.

        • +2

          Maybe Tyrion Lannister was the former owner?

        • tfw 1.65 :*(

        • lol, removes carpet adds what maximum 15mm of flooring? loses 60cm headheight.

      • +3

        Load of BS by the agent, even with a new sub-floor + flooring + underlay its no more than 50mm. Making the original ground to ceiling height 1850mm. I'm 1750mm without shoes LOL

        BTW i built my new house last year and from concrete to ceiling was 2450. I did a new sub floor of 20mm and solid hardwood 20mm.

        • +16

          asian female students wanted

      • +1

        They must be some thick-arse floor boards! Caveat emptor…

  • +27

    First off - it appears this is in NSW, and you are actually using a conveyancer rather than a solicitor? This sort of fight is much more the domain of a solicitor than a conveyancer, hence why your guy/girl is rapidly trying to get you to go elsewhere. Did the conveyancer provide you with advice on the contract prior to the auction? If so, I would be somewhat wary as they may have missed something in the contract and be covering their ass now.

    It also seems very unusual that you purchased an unfinished (or at least unregistered) unit at auction.

    IMO the valuer/bank are way over-stepping the mark here. Yes they are entitled to ensure the security you are providing is of suitable value, but if it has been approved by council as a residential unit, strata plan registered, etc, it is not up to them to decide it should not have been. There is almost no chance the valuer knows the relevant requirements better than the certifier. The fact that the certifier has been reprimanded for another development is not all that relevant.

    First thing to do (as noted above) is to talk with other banks ASAP, and hope that they use a different valuer who is less knowledgeable/observant/biased/whatever. This should get you a loan and hopefully stop you defaulting on the contract if they call for settlement shortly.

    Another thing I would be doing is making a lot of noise at council (personally) about what your valuer has said and whether it is true/correct or not. If they haven't issued the Occupation Certificate as yet (which seems unlikely as the Strata Plan is apparently registered - your conveyancer should check this), then maybe you can get them to look into it further before doing so.

    Going to court over this is fairly unlikely and would be an expensive gamble for all involved. It is more likely the parties would come to some sort of agreement before it went that far.

    • +2

      Thanks DJ really appreciate

    • Even if OP managed to get another bank's approval, would OP still continue with the purchase? I highly doubt so….knowing potential issues he might need to deal with in the future. I baffles me that OP even considered buying such unit…

      • +1

        Well its a bit too late for re-considering - OP doesn't really have an option to not proceed now.

        Looking at the further information provided in various responses, it appears the contract is conditional upon the Vendor being able to obtain an Occupation Certificate for the unit from council?

        If so, then it is not so much of an issue - either the council issues the certificate, the property is therefore fit for habitation, and the unit (with all its flaws) can continue to be rented out, or the council doesn't issue the certificate and the OP can get out of the contract.

        Unsurprisingly, there is nothing in a contract that allows a purchaser to get out of it because he heard the Vendor's certifier or builder or whoever was dodgy.

        Either way, OP needs to get the finance in order in case the certificate comes through and they call for settlement.

        • That's Dj Kelly.. that's what my conveyancer told me I still have 20 days .. if vender can get the occupation certificate then I don't have to worry if not then I win anyway but the only concern is what if she gets the doggy certificate same as the EM registration ??

      • True … Thats what my concern is … if i wanna sale it in future its goona be the same issue with another purchaser.. and honestly i would just feel bad to do it

    • Very strange that your conveyancing said that terminating the contract will lead to court action. That definitely isn't the case.

    • +1

      It was my understanding the bank checks the security of the home incase the loan defaults, correct?
      It doesn't take a genius to assume a unit with a ceiling height of 1.8m is very hard to market compared to one with a higher ceiling. The bank can't simply dump it for ~10% under market value - they'd still need to search for a family of little people.

      Note I know almost nothing about the matter - though from what I know the banks decision is understandable.

    • This is the only post in this whole thread that makes any sense.

  • +5

    1.8 metres from floor to ceiling???? Is this a typo? How do you stand up?

    • +1

      It's real :( - I know what u mean though ..

      • +59

        Dude it cannot POSSIBLY be real; you are mistaken.

        You absoloutley, positively, did not buy a unit with a 1.8m high ceiling. Such a thing does not exist outside of Middle Earth.

        Edit: Holy shit, is this it?…

        How on earth did this ever get any approvals?

        • +9

          Holllyyyyy craaaappp

        • +3

          That has to be a joke. How could anyone live in that? Did the OP not read the sec 32 and consult a conveyancer? Most of them will do it for free first time.

        • +6

          Amazing detective work.

        • +4

          What a shithole! I'd rather go homeless

        • +10

          I'm from the area so here's my punt on what actually happened.

          OP's in the market to buy, he's been in the market for quite a while but everything is way out of reach. Generally speaking 2bd apartments are like 5-600k and pushing higher when off the plan. He comes across this place which is advertised in the 400's and went in for the bid possibly thinking this might be a steal at 380k with no intention of actually living in there but continually renting it out.

          He mentioned it's rental yield does well, so another tick for his investment property. Just as a side note the community here will generally stack 8 or more people in 2 bedroom apartments, no kidding.

          Unfortunately OP's jumped the gun here and gone way in over his head before dotting his i's and crossing his t's. Sometimes when it's to good to be true it is.

          I really hope you resolve this OP because we all make mistakes.

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