Pre-Settlement Inspection Issues

Hi all,

Thought I'd get the OzBargain opinion, and see if anyone else here has gone through similar to see what worked for them.
I purchased an off-the-plan apartment back in Feb 2018, and the time has finally come to inspect. After the builder set his 15 minute timer for us to frantically go over everything with a fine tooth comb, we found some minor issues, such as scuffs/dents on walls, paint overspray, etc. All have been logged with the builder and will be rectified.

However, when measuring the rooms, we found the dimensions to be quite a bit smaller than what was shown on the plan 3 years ago. I understand that a 5% variation is allowed as things do not always go to plan, but here are some specifics of the more drastic differences:

Main bedroom
Plan (approx) 3.2m x 3.5m
Actual (approx) 2.3m x 2.9m
(50% reduction!)

Dining
Plan (approx) 3.6m x 3.2m
Actual (approx) 3.2m x 2.8m
(25% reduction)

Other areas are similar to the plan we were given, though some are still within 5-30cm reduction (never larger, go figure).
My plan shows measurements from the external wall, which I believe is a factor for the smaller variations in other rooms. As for the main bedroom being 50% smaller, I can't imagine the walls taking up that much room. I've contacted the developer for further clarification, but ultimately they will not want a bar of it, so its best left to my conveyancer.

So my questions are. Has anyone experienced a similar situation? How did you resolve it? Did you settle? Was an offer made?

Yes, I agree with the upcoming comments on "don't buy off the plan". Lesson learnt, but I am lucky that the banks have valued it for more than what I signed for. Have that going for me at least… And I'm still trying to get the developer to own up to the fact that their incompetent sales team never handed over the signed contract for a free double sink (which my conveyancer is trying to follow up to countless ignored emails on their part) (Developer from hell I think?)

Update 1
Waiting to get the Strata Plan to determine if the overall area is within 5% of the signed size.
I've been informed by my conveyancer that due to the plan having a disclaimer that its a guide only, and given in good faith, that so long as the total area is within the tolerance, they are within their rights. Which sounds dodgy as @#!& to me, and am getting a second opinion just in case.
The above sounds like as long as you have been given the total area, it does not matter if they change wall positions, or remove a room entirely. Hell, why not just remove all walls for maximum saving?

Whilst I'm at it. The developer is also rejecting a double sink installation that was signed for because their sales rep never handed them the contract. My argument is that if I employ someone to act on my behalf, I also take on any incompetency they bring to the table, and that it should not effect the customer in any way…

Thanks to everyone who has offered suggestions, will keep this post updated as best I can. And as calmly as possible :)

Update 2
Had our second inspection with the same rude supervisor this morning. He rocked up 45 minutes late and refused to log any new issue we found into Hamilton Marino's system.
When drawing his attention to consistent blue paint splatter on white skirting boards, his response was, "You can tell me all you like", and continued to play with his phone. When asked if the paint on the floor boards would be cleaned prior to settlement, he stated, "No one can clean better than an owner", and that we would be given instructions on how to clean it ourselves.

As expected, more issues were created in the process of fixing the others, such as additional dents in walls.

Overall size seems to be within tolerance. Rooms are still smaller, but we must account for the external walls. Our rushed initial sizing with a measure tape were a lot more inaccurate than I realized. So apologies for reporting larger inaccuracies than what it is. I've attached the blueprint with our sizing in this update for reference here

We took a third party inspector (Correct Inspections) this time, and they picked up on a few more issues we missed, while also logging all our concerns in his report which has now been forwarded to Blue Earth Group (developer). They have since apologized for the way the supervisor acted, and have forwarded the report onto the builder to rectify. Correct Inspections did a great job with the report, highly recommend!

I would also advise anyone who wants to measure a place, go purchase a laser measure as it can be more accurate and quicker when given time constraints.

Thanks to everyone for their comments and suggestions!

Poll Options

  • 434
    Don't settle until the developer offers a solution
  • 7
    Settle, be happy with the potential gain in market value
  • 8
    OzBargain Bikies!

Comments

  • +1

    I think your best option is going to be to cancel the purchase due to significant variation. Doubt there is anything that can be done, or you would get anything for the effort.

  • Moot question as your best case scenario is to get out of the contract which you probably don't want to since it's appreciated a fair bit. No chance they're going to reimburse you or move the walls.

    • +1

      I remember reading these a year after I took the plunge. Also read that there have been new rules introduced to help purchasers in these instances since then. I'll need to look those up today.

  • The property have gone up in value, so is the off the plan in Sydney?

    • The developer would have eaten the next 5 years worth of capital gain from the day you sign the contract. Most newer apartments these days are valued at lower than contract amount.

  • +7

    Typical developers. They’re pigs. It’s VERY common for them to undersize, and usually the worst offenders also exceed their stated build times so they can on sell at a greater profit, shafting you yet again.

    Personally, I think they should be compensating you for the loss of space. If that bedroom makes the total floor space 5% less, they should refund you 5% of contracted price plus a penalty. It’s the only way the bastards will be kept honest.

    I’m so sorry you have had this happen OP, this should be an exciting time for you, not a stress filled one from being shafted.

    • Thanks mate.
      It is a pain, like you said its meant to be an exciting time. Though over 3.5 years my excitement has dwindled away, which is probably a good thing I didn't set my expectation high now that I have seen the place.
      Agreed that they should be held accountable for any major changes that was agreed upon.

  • +4

    couldn't swing a cat in that main bedder

    • +1

      Once the bed was in there you couldnt get in there to swing anything.

    • These euphemisms are getting out of hand.

  • they always write approx. measurements and (not to scale) to get out of these situations. OP is looking for maybe a compensation or handout? they wont give it to you mate, leave it if you are that concerned.

  • +2

    OP, how do you know what was the size of the bedroom when you signed up for OTP? Is the size specified in your contract?

    Also, they may have provided you with the size including wardrobe but you may be measuring it from the wardrobe to the wall. I agree, the size of the bedroom is ridiculously small.

    PS. I never heard of 15 mins timer for inspection - I spent hours in my OTP purchase making sure that every inch is spotless before settlement. Looks like the agent is being hard.

    • The 15mins inspection is the new normal which the developers forcing and are exploiting the customers in the name of Covid restrictions. I also had the same for my apartment in Oakleigh VIC. The conveyancer are not the solicitor and they don’t care about your situation and only care about completing the settlement so that they can get their fees and leave u alone to fight with the developer for any variations pending or anything you’re not satisfied about. All this from my personal experience. The solicitor don’t even advise u as how you can protect your interest despite having gone through same cat fights between the buyer and the developers with their last clients. I know that you get what you pay for! For $1000 fees this is what they offer.. In my case I even offered to pay more to help me fight with the developer for pending variations but was denied and made me settle w/o finishing all the variations on the contract. Sadly, this is the reality of Australia which only favours the developers as they help the economy move forward and doesn’t care about normal people like us who spend their lives savings for a dream home. Going to VCAT is the only option but the developers don’t buzz even if its in your favour unless you legally via a solicitor which is very expensive..

      • Going all-in on one illiquid asset is bad financial risk management.

        People should consider something like 50%/40%/10% or 50%/25%/25% where 50% is a high conviction long term asset/s, 25%/40% midterm and 10%/25% short term play money.

        • +1

          People should consider something like 50%/40%/10% or 50%/25%/25% where 50% is a high conviction long term asset/s, 25%/40% midterm and 10%/25% short term play money.

          Did you smoke something before writing this? So out of topic! Let us know if you know the cure of Covid as well..

  • +4

    I they offered you to cancel the contract, if it was me - I'd be happy to walk away from this nightmare.

    If they have been this dodgy with size who knows what other corners were cut….

    Opal towers…

    • +5

      walk away is an option but not without a good fight. OP has good chance to win, with the other owners as it cannot be just his one. These dodgy developer/builder has got away with these lousy/dangerous practice for far too long. 50% reduction of the main bedroom is really criminal.If you pay for a 80 inch TV and get a 40 inch one will you be just fine just because the price for 40 inch TV has gong up a lot?? why would anyone accept a 50% off on one of the most expensive purchases an average person have in the life time?

      • +2

        So he gets compensation, nothing can compensate for what hes been sold… - as I see it hes still left with a rubbish place - whose going to buy a place that small?

        • if you think there is a profit with settling and reselling it after 6months/1year? do the numbers make sure you take out the cut for agent and if any tax, if you can make at least 50K at least, settle and resell it. if not, WALK

  • +8

    I personally wouldn't accept "Hm it's okay because the value has gone up"

    Well the whole market has, so you just lost your buying potential in your next house.

  • +12

    This actually makes my blood boil. This is scummy developer behaviour and tactics of the worst order.

    You signed a contract for two bedroom apartment. With those dimensions what you are being sold is one bedroom apartment and study.

    Look at what one bedrooms and studies were originally being sold for calculate the difference between price of one bedroom and study and two bedrooms and this will tell you how much the developer is trying to steal from you.

    The fact that the property may have increased in price is lucky and may be a potential saving grace. Personally I would be inclined to see my solicitor rather than just conveyancer.

    Buying new house or investment property is supposed to be fun and exciting time what scumbag developers like this do is bring the whole industry into disrepute.

    We have more consumer protection and rights when buying $10 toaster than property that often costs a million dollars or many multiples more.

    • +4

      justgooddeals said it all.

      You bought a 2bd unit and got 1bd + study. See a solicitor, conveyancer will only interpret and process legal instruments but not fight them. You will need to consider whether the cost of legal action (plus time) is going to be worth the difference of the product you thought you bought and what you got.

      Australia's development market is…I was going to say borderline criminal…is criminal. You only need $2 in your pocket and a bucket of backers (ie investment suckers) to start developing. Pheonix development companies are rife.

      Went to Dubai a few years ago and they seem to have a better system which is regulated by the government (the one area which should be ruled with an iron fist). I'm not exactly sure how they manage it but only a few select companies develop and the market there feels more like you are purchasing a "product" (eg imagine if Apple and Samsung sold housing).

  • +2

    I'd imagine they're taking the chance that they can just resell it at a higher price if people won't settle.

    You're doing the right thing by speaking to your conveyancer and see what they say in the first instance. Make them actually work for the settlement fee rather than just rubberstamping for the $3k. It's not happened to me but its happened to a friend where an extra two apartments magically appeared on the floor. It was sorted to his satisfaction but he had to push really hard and then sign an NDA so he didn't corral the natives (other owners) into seeking similar recourse. Helped that his Father-In-Law was a heavyweight lawyer with a punitive streak and time on his hands.

    I'd imagine if they're trying to pressure on time that an injunction can be granted to pause it whilst options are explored. Just ignore what the developer says has to happen or will happen and let the experts deal.

    • Glad to hear your friend got their situation sorted.
      Agree with not worrying about the developers bullying tactics with time restraints in regards to settlement dates. From what I have read, legally if there is an issue I do not need to settle until things have been resolved. (Could be wrong, but that's what my solicitor and conveyancer can advise on). But in that case, happy to tell them they are not above the law.

  • +2

    The plans normally have a scale on them, so you should be able to open them in something like Foxit PDF and use the 'measure' tool to work out what the internal dimensions were indicated as on the plan.
    That will at least give you something fixed to base your argument on.

    Exterior wall offsets in particular can really lose you distance. External walls may be up to 50cm. Your internal walls will almost certainly be < 20cm, but again the measurements will be to midpoint on premise internal walls, so you might lose 10cm on each internal wall, and 50cm on your external wall.

    That is a really nice layout.

    I've recently settled on an off-the-plan also. You'll get time after settlement to raise defects also, but it's still not an ideal situation to be in.
    Items that I've seen as being problematic:
    - lack of sealing on window/door frames to plasterboard
    - lack of correct adjustment of window seating (so the internal sealing isn't complete)
    - bad plaster finish on walls (in particular around doors / corners)

    Regarding the size discrepancy, you'll really want to follow that up with your conveyancer. Since your two choices will be to negotiate for a lower settlement price, or to find a way to walk away (and claim back your deposit).

    Who was the developer for this apartment? (and what location is it in?)

    • +3

      Correct, there was a scale. Which I will use to my advantage if need be as I am sure they will make the argument that since the external wall sizings were not included, the rooms are within tolerance. But not according to the scale…

      I would love to mention the developer, but until I get further information from my solicitor I think it's best to keep that hush for now. Normally I'd love to name and shame this kind of crap.

  • What does your solicitor say?

    Solicitor or conveyancer?

    Tell us who the developer is. You can't be sued for stating what's indisputable- 'xxxxx built my apartment, the main bedroom was supposed to be 11.2sqm but when built was 6.7sqm'.

    6.7sqm for the main bedroom? This isn't Hong Kong.

  • Ask for compensation/discount on the missing floor space from the -5% to -50% and see how you go (all through the solicitor of course).

  • Settle, be happy with the potential gain in market value

    Except every other place has also gone up by at least that amount.

  • +3

    Being an apartment I assume it has a Strata Plan, how does your area from the initial/proposed Strata Plan vary to the final Strata Plan?

    The final areas need to be measured by a surveyor to confirm the areas. This should give you the change in the area and confirm if it is more or less than 5%

  • +1

    So, what exactly happened to make these rooms so much smaller than specified? Did the whole building shrink? Was space taken from your apartment and given to someone else? These kinds of drastic cuts are not accidental. Maybe someone was being really cute with the drawings and assumed all walls have 1mm thickness?

    Imagine if you purchased a loaf of bread and instead of 650g it was 325. Would you take it back, or just accept it?

    You will have problems selling this apartment to anyone other than a single person. The bedroom is too small.

    And setting a 15min timer for you to inspect everything. Absolutely ridiculous. This is the largest purchase of your life, the builder is making a hefty profit, and they're concerned you might take a few minutes too long to check everything?

    • +1

      No need to flog the dead horse.

      Haha, it's crazy. Dodgy developers. I will be following OP. I really want to know what the outcome is and once OP is clear to disclose. We definitely would love to get a name and shame. Cause I have a few mates who also brought OTP and might be settling soon as well. I really want to know if it is the same house so I can warn them too.

  • What is your internal area in the registered strata plan? Compare it to the contract and work out if the difference is more than 5%. Interesting to see both numbers.

    • This is my next step.

      Supposedly its the overall area they care about matching. Any individual room, or layout, is completely free to change by the developer according to my conveyancer.

      Might need a second opinion…

      • Just out of interest, what's your desired outcome? What would you like to see happen?

        • +1

          If the overall area has been reduced above 5%, then at the very least I’d want the price to be adjusted in proportion to the change in the area.

          I will need to get a few more details before figuring out what I am able to do about room size changes that I personally (and from the looks of it, most if the commenters here) deem to be a substantial change.
          If there is a leg to stand on, then a suitable discount that can be agreed upon might be the best outcome, but not holding my breath.

      • Supposedly its the overall area they care about matching. Any individual room, or layout, is completely free to change by the developer according to my conveyancer.

        What does the contract you signed say?

  • +2

    Hmmm prices 30% higher, building 30% smaller!

  • +2

    Classic stitch up.

  • +1

    What outcome do you want?

    Cancellation of contract and deposit refund?

    What is the current value? Maybe buy and sell immediately for profit?

    They're not going to rectify, so that's not an option.

    Price reduction?

  • Keep us updated, this gon be good

  • +1

    I think they've built a panic room somewhere inside that room!!

    • Or some other 'secret room' for the master bedroom…

  • Which developer?

  • +2

    Our unit purchase was a nightmare and sounded exactly like yours. Bought off the plan 2016 only settled 2 days before Christmas last year.

    Everything was smaller.
    The entire build was shoddy.
    Even after 4 inspections things were not finished.

    They forced us to settle with shit in the toilet bowl, if we didn't they would charge us the extra rates on top.

    Had to redo the entire lawn and planter beds in our own time.

    We rented it out till we sold, cut our losses and moved on.
    Hope you can do the same.

    Our first home purchase turned in to a loss and a nightmare of an ordeal, I wouldn't wish the stress the process took on even my worst enemy.
    The builders/developers simply do not give a shit about you.

    For anyone reading this PLEASE do not buy a unit off the plan!

    • +2

      Damn sorry to hear that happened to you.

      So far the only response the developer has given me is that there will be no additional inspection as per builders guidelines, and if there is any issue post inspection I can flag them then.

      If the previous communications with them is anything to go by, they’ll deny it was ever said and say, “I can’t find the document that states that on our end”.

      I’m just lucky I am in a position to be able to take this as a lesson learnt and hopefully provide others some insight into the dodgy off the plan system.

  • So you have lost almost 5 Square metres from an 11 square metre room, that is pretty bad. rough calculations on that room alone you would need a place of at least 100 square metres for it to be within 5% tolerance, if you have lost space from other rooms too then I doubt they are anywhere near within tolerance.

  • I would want to pull the pin based on that bedroom shrinkage alone.

    • +1

      no, I would want compensation or something other than pulling the pin. The reality is even if he settles and sells he will almost certainly make a tidy profit, the issue then is of course finding somewhere else suitable at a reasonable price which is where you would want the compensation.

      • Yep, highly unlikely OP would be able to purchase something of a similar size to what they were expecting for the same price. Would be looking for compensation to at least buy something equivalent to what was expected.

      • He can only make a profit if he finds someone to buy. Who wants to have a Master bedroom so small. The other bedroom appears bigger but it's quite far from the bathroom.

  • Dodgy ass developer, where does the shrinkage go? Have they built an extra unit?

    Name and shame.

  • +4

    Honestly, developers like these need to be jailed and have everything stripped from them. If this is how you made your living, you don't deserve it. We need more honesty and integrity in this world while the opposite being severely punished.

  • +1

    I can scale this up for you and tell you the areas if you would like op.

    Also note dims are frame to frame size so it's less 🙄

    I work in the industry.

    • Already managed to have these scaled up using software.
      Thanks for the offer though!

      Once scaled and extracting the internal dimensions, they seem reasonable to me.
      Still need to figure out how to get accurate measurements though while the builder is denying access for another inspection.

      As you work in the industry, I'd like to get your opinion on the following.
      Should final inspections be conducted after the property is completed? The builder said to us that some issues are not relevant to log as, "we have yet to complete this apartment yet". I'd say it was 90% of the way there. Curious to know what is an acceptable percentage of completion before inspections can be carried out. I would assume 100%.

  • Hey OP I had the same concerns with my OTP as you're only given 45 minutes to view everything. My conveyancer said it was normal and you're only there to make sure the place is habitable e.g. there's a kitchen, water etc and no major defects from what you can see.

    At least in NSW, you do get 2 years to get defects fixed. But it is good to get everything up front so it's fixed before you move in.

    Regarding the difference in bedroom size. Vic planning department has guidelines on what the minimum size of bedroom you can have to avoid situations like yours.

    In saying that, they are allowed to vary size by 5% variance. It sucks, but your contract does state this.

    • Thanks for that, I missed the Vic guidelines. I will definitely need to chase up more accurate measurements if that document is anything to go by.

  • It seems off the plan apartment buying vs home buying is slightly different, as with a home, you can pretty much inspect it throughout the build, not so much with an apartment building

    Didnt you blokes in sydney have that dodgy developer salim bloke who also tried being a mayor but is now in jail? pretty sure he was notorious for doing the exact same thing that has happened to op. Im guessing their game is that after such a long period of time waiting for the apartment to be finished, 95% of purchasers cbf with the hassle and just move in, the other 5% like the op who actually stand up, they might just pay some small compensation to, which is all factored into the developers margins.

  • because their sales rep never handed them the contract.

    Probably why your room sizes aren't to specification

  • +1

    The plan you've got looks like it was done in Smart Draw, which definitely makes me think the dimensions are not exact (and so I presume a developer would have several clauses protecting them about this). Was there a stage where you saw the actualised plans - the blueprints that the builders actually worked off? You should be able to get access to those… and you can just compare the blueprints to your current plan and see if they are within tolerance. If they are, then it's most likely a building error during the actual build… if not, then it might be a conversation for the lawyers.

    • Definitely a few clauses in my contract that I was advised by my conveyancer were standard in all OTP contracts and would be unable to remove. Mentioning that the plans and marketing material is as a guide only.

      I have emails saved requesting more detailed plans numerous times early in development, to which was always denied, stating that those plans are never given to purchasers. All to save their own skin in situations like this.

      I’ll definitely be communicating with a solicitor this week to see what they say, and to draft up a response to their rejection for a further inspection and measurements.

  • How are you going OP, any updates?

    • -2

      The OP got his free ozbargain advice that would have cost him thousands with consultants … We'll never hear back on the outcome ..

  • +1

    I’ve managed to secure another inspection after advising the developer that the builder had told me the apartment was not complete, and was the cause of all issues found. And that I was not confident that more issues won’t be created while they fix the existing defects.

    So will have a better idea this Friday.
    Taking an independent inspector with me along with a laser measure to get more precise and quick measurements of the rooms while I am there.

    Thanks to OzBargainers for all the free advice ;) I will update this post on Friday with the outcome, as settlement is supposed to be the Wednesday after.

    • -1

      Good luck .. not sure how they are going to fix rooms with incorrect dimensions … seems like a bad sign.

  • Maybe talk to a lawyer

  • +2

    Update 2 in original post for all who are interested :)

    • +1

      Looks good, congrats

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