Fault Discovered in Property - Any Recourse against Previous Owner?

hbspark1 on 26/07/2022 - 13:50
Last edited 26/07/2022 - 14:59 by 1 other user

Hi There

A bit of backstory first.

I purchased a house in Perth with a granny flat attached. I did a building inspection prior to purchase which picked up nothing.

A few months later after being tenanted, the tenants noticed bulges in the floor boards (most likely had been there prior to moving in) We had the floor inspected by a different builder and the floorboards were rotten from water damage seeping in from outside. I tried to claim the home insurance but the insurance mob sent out another inspector who said it was not designed to Australian standard and therefore not eligible for an insurance claim.

He noticed that the damage was known to the previous owners as they had tried to do some poor concrete repairs to stop water ingress from outside.

I got the plans off the council and found they were to Australian standard but were not built according to the plans. We tried to reach out to the builder who no longer exists.

I found out that the previous owner was an owner builder and did not use a registered builder to build the granny flat. I purchased the property six years after the granny flat was built. (I'm not sure if the rule is six years for seven for indemnity insurance)

I am in the middle of repairing the poor work, approximate cost around $18,000. Any chance I can take the previous owner to court, or small claims or try get back some sort of remuneration for selling a building not up to Australian standard?

Any help or advice would be greatly appreciated.

Home & Garden

Comments

  • Drakesy on 26/07/2022 - 13:55
    +38

    Probably should be going after your building inspector Imho.

    Not sure how much recourse you'd have after settling

    • Muzeeb on 26/07/2022 - 13:57
      +3

      Don't they make you sign some sort of waiver so they can't be sued?

      • Drakesy on 26/07/2022 - 13:58
        +1

        Yeah that's true.
        It's the ultimate get out of jail free card.

      • djkelly69 on 26/07/2022 - 14:04
        +5

        Most building reports have more disclaimers/waivers than reporting. They can't contract out of it if they were negligent, but the problem is that they (ie. their indemnity insurer) will fight it every step of the way and proving the negligence may be an issue.

        Costs are probably going to exceed $18k pretty quickly without any guarantee of getting them back.

      • dogboy on 26/07/2022 - 14:27
        +20

        Mine did. Every page of the report had a subnote saying "We recommend you get a professional to check any of these items and we are not liable, etc. etc.". Why the hell am I paying these people when there is no guarantee or recourse for them? Seems crazy.

        • Muzeeb on 26/07/2022 - 14:28
          +3

          It's a scam for lazy muppets

        • mbck on 26/07/2022 - 14:50
          +5

          Builder inspectors are useless.

          • netjock on 26/07/2022 - 15:00
            +12

            @mbck: Builders are useless, therefore you'd expect those in bed with them would be the same.

            With the amount of issues with trades people (standards of work, bankruptcy and tax avoidance) it might be time they send all tradies to university and make them sit ethics exams. At least when they get taken to court they can't plead they are uneducated and barely finished high school.

            • mbck on 26/07/2022 - 15:12
              +3

              @netjock: Oh God, they're all under the one banner of mega useless beings.

              There is like…1% of decent and good tradesmen. The rest are just…

              • netjock on 26/07/2022 - 16:10
                +3

                @mbck: My father is in construction for like 30 years, uncle is an electrician, plumber and gas fitter. Know plenty of small time developers. You know they all have an opinion but nobody can build a house or fix something without causing another problem.

                Was talking to a TAFE about getting a Cert IV in building. Apparently most of them run courses with prerequisite that you've done another trade qualification (TAFE + apprenticship) regardless of how high of a degree that you might have. If you are a plumber / electrician on $1k a day why would you bother being a builder? They've created their own mess. It actually isn't a labor shortage, it is a qualification shortage.

        • Darayus on 27/07/2022 - 11:12

          Then be ready to pay a bomb for their report, are you aware if you buy commercial property there are no valuers or inspectors available for commercial property and they charge anything north of $ 10K for a small shop reports ( even if the shop is just 2 years old build). Insurance is too high, that the reason why specialist doctor charges you a fortune for each consultation because 35 to 40% of your fees goes to insurance because they want to protect against any claim that you may sue them in future for their view and opion.

  • Xistn on 26/07/2022 - 13:56
    +6

    Better call Sal!

    • Montyjpm on 26/07/2022 - 15:51
      +2

      Nah, call Mike as he will get the job done.

      • [Deactivated] on 27/07/2022 - 18:19
        -3

        Who would have thought that Gus would finish off Lalo?

        • [Deactivated] on 29/07/2022 - 13:45
          -2

          OMG! I got negged for the above post.
          Was I meant to provide a spoiler alert for the snowflakes? šŸ¤£

    • Euphemistic on 26/07/2022 - 16:44

      U know U need to.

    • Montyjpm on 02/08/2022 - 18:05

      20% off…20% off…20% off…20% off…20% off…20% off

  • djkelly69 on 26/07/2022 - 14:00
    +5

    I got the plans off the council and found they were to Australian standard but were not built according to the plans.

    Wouldn't council/a certifier have had to sign off on the build once it was complete?

    • hbspark1 on 26/07/2022 - 14:40

      I am unsure, something I will need to look into

  • SF3 on 26/07/2022 - 14:02
    +12

    I thought property purchase (unless New) is as-is, warts and all.

    Would be like buying a 2nd hand vehicle, unless there is some warranty (a few months from a dealer).

    But come on, this was 6yr ago. I doubt anyone but the owner (i.e. OP) is on the hook to fix it.

    • hbspark1 on 26/07/2022 - 15:16

      The title was of my discussion was changed. I have only just purchased the house. It was noticed within two months of purchase.

  • 87percent on 26/07/2022 - 14:04
    +3

    doubt it… isnt it basically "too bad, too sad"??

  • KeplersLaws on 26/07/2022 - 14:18

    seek independent legal advice

  • apsilon on 26/07/2022 - 14:23
    +7

    Of course you can sue but what you need to consider is what actual proof you have that the original owner was responsible, especially 6 years later. The original owners solicitor is going to ask if you had a building inspection done prior to buying to which you'll respond yes and they didn't find anything wrong. The next question they'll ask is then why are you suing my client as clearly the problem has arisen from work undertaken since. The only ones that'll win are the solictors' bank balances.

    • hbspark1 on 26/07/2022 - 14:43
      +1

      I guess the issue was beyond what the eye could see. We have confirmed that the builder deviated from the plans to cut corners.

  • AndyC1 on 26/07/2022 - 14:35

    Google "lawyer" in your suburb and call them about starting a case to get your money back.

    Good luck a you will need it.

  • try2bhelpful on 26/07/2022 - 14:53
    +3

    It sounds like your building inspector is who you should be talking to. How did they miss the, obvious, faults?

    We all need to learn the lesson on checking council plans against what is actually installed before buying a property. You would need to talk to council about what liabilities there are; but be careful they donā€™t condemn the place as unliveable.

    Houses are, largely, caveat emptor and inspectors will find ways to avoid being held responsible for missing major faults. It has ever been thus. You get more protection buying a shirt than buying a house.

    • netjock on 26/07/2022 - 15:01
      +2

      careful they donā€™t condemn the place as unliveable

      Do that before buying it, price will go through the floor.

      • try2bhelpful on 26/07/2022 - 17:13
        +3

        Sounds like the OP might go through the floor.

  • pharkurnell on 26/07/2022 - 15:19

    Wheres Dennis Denuto when you need him

    • Euphemistic on 26/07/2022 - 16:45
      +2

      Fixing his copier.

      • knasty on 26/07/2022 - 18:39

        Maybe Lionel Hutz is available?

  • Trying2SaveABuck on 26/07/2022 - 15:38

    as someone who also got shafted post settlement i can tell you that there is pretty much nothing you can do, you might be able to go after the building inspector but i doubt that will lead to anything but for 18k it is worth a try

    chances are in the building inspection there will be some 'clause' that absolves them of any actual responsibility - thus building inspections are generally useless, unless there is something 'glaringly' wrong

    • hbspark1 on 26/07/2022 - 16:17

      Yer there was. It was not picked up at the time due to not able to access sub floor.

      • JIMB0 on 26/07/2022 - 16:55

        Access hatch too small?

        • hbspark1 on 26/07/2022 - 17:41

          I believe it was actually dog crap littered from previous owner.

          • try2bhelpful on 27/07/2022 - 10:58
            +2

            @hbspark1: Frankly that excuse is ā€œdog crapā€. That shouldā€™ve rung the alarm bells for you. My experience with inspections is they are rubbish, as well. Apparently they donā€™t do roofs, or subfloors, and say any other faults are due to changes in the meantime; or were hidden by something else. I went with the Archicentre and they were still useless. Missed most of the faults with the building.

            • JIMB0 on 27/07/2022 - 12:16

              @try2bhelpful: When I got an inspection done the inspector didn't look in the roof cavity as the internal access was over a sink and they claimed it was too dangerous. I've used it multiple times quite safely. They could have lifted a few tiles and accessed it from the outside but claimed it was too high.

              • try2bhelpful on 27/07/2022 - 13:55
                +1

                @JIMB0: Not surprised. I bet they didnā€™t offer a discount for a non thorough inspection either.

    • oO0Dam0Oo on 26/07/2022 - 19:04

      They must still carry out the inspection to the Australian Standard. It is very clear what is considered a major/minor fault and the extent to which these must be disclosed.

      Also if in Victoria (not sure where you reside) look at Material fact guidelines.Edit Apologies you mentioned Perth.

  • Peanut money on 26/07/2022 - 16:11
    +2

    Not sure why people get building reports - better you get an old builder/chippy thatā€™s been building /fixing houses for 30 plus years to do a good walk around before you buy

    • andresampras on 26/07/2022 - 16:50

      Because they'll still all be going off a checklist?

      That's like saying why get a car pre-purchase inspection report when you can just get a mechanic to check everything.

      • Peanut money on 26/07/2022 - 19:05

        I see your point and logic - but NO

        a good builder will give you a ton of info based on experience

        The problem is finding a good builder that actually has your best interest

        Someone that does a checklist in the building game is just a pen pusher that is too lazy or incompetent on the tools

  • foxmulder on 26/07/2022 - 16:24

    Sydney Morning Herald: ā€˜Almost financially ruined usā€™: The number one complaint of new home buyers in NSW.
    https://www.smh.com.au/property/news/almost-financially-ruinā€¦

  • Euphemistic on 26/07/2022 - 16:49

    He noticed that the damage was known to the previous owners as they had tried to do some poor concrete repairs to stop water ingress from outside

    Thatā€™s not proof they knew about damage, merely recognition they knew there was water getting in. How they found that water ingress is unknown. Might have been a pest inspection or similar.

    I suspect you are out of luck chasing the previous owner.

  • pnt on 26/07/2022 - 17:26
    +6

    I hope for the day when there is no housing shortage, and buyers can spend a decent amount of time with due diligence and can walk away before buying if in doubt.

    As it is, buyers desperately leap in, fingers crossed, and, if lucky, are either bailed out by rising prices or by the next unfortunate buyer.

  • happydude on 26/07/2022 - 17:31

    Another investor that thinks property should be risk free and that any loss should be covered by someone else.

    All investments carry risk. There is no one to claim this from.

    You can try and find something in the Joint Form of General Conditions for the Sale of Land, but I don't think you will find anything. Certainly there is nothing there about meeting Australian Standards. s 9 and 15 would be your only hope but I don't think it will help you.

  • garetz on 26/07/2022 - 20:07
    +1

    Just like buying a car, its buyer beware. The cost of legal action will likely be more than the cost to fix the actual problem, so best to do what you need to do.

  • Cheapskate Paul on 26/07/2022 - 21:15
    +2

    Look on the bright side. As an investment property at least the cost is a tax deduction. If it was a PPOR you would pay the full cost.

    • kiitos on 27/07/2022 - 08:18
      +2

      Not sure it's not a ppor and Op is just renting out the granny flat.

      • hbspark1 on 27/07/2022 - 09:12

        its an investment, but just losing out on the granny flat rent while its being fixed. I like the glass half full attitude :)

  • MontyMacaw on 27/07/2022 - 08:01
    -1

    If they knew about it and didnā€™t disclose it then you will have a case. You would need to prove that. Previous tradies that have worked on the property would be one line to follow. Itā€™s a lawyer job and Iā€™d start with the agent.

  • saltypete on 27/07/2022 - 08:29

    You may be better off putting your time and energy into fixing the issue.
    You may find that undoing the bits done wrong and getting them done properly is not too hard, and you may be able to do it yourself.

    • hbspark1 on 27/07/2022 - 09:14
      +2

      Its almost all fixed, priority was to get it rentable again.

  • Odin on 27/07/2022 - 09:50
    +1

    Nope. Caveat emptor

    • Jono05 on 28/07/2022 - 14:03

      This. Sale contract would have a clause.

  • Slenderperson on 27/07/2022 - 10:15

    I'm guessing you didn't arrange title insurance prior to purchase?
    https://www.firsttitle.com.au/products/title-insurance-for-rā€¦
    They look to only cover 'unapproved building works' so it might not have helped if the granny flat is technically approved by council.

  • Grunntt on 27/07/2022 - 10:41
    +3

    https://www.commerce.wa.gov.au/building-and-energy/home-indeā€¦

    Owner-builders are responsible for the building work carried out for a minimum of six years. If the owner-builder sells the home within seven years from the date of a building permit being issued, they are required under the Home Building Contracts Act 1991 to have in place a policy of home indemnity insurance that covers subsequent owners if problems with the building develop and the owner-builder is unable or fails to rectify faulty or unsatisfactory workmanship due to disappearance, death or insolvency.

    The home indemnity insurance policy must cover the purchaser of the home and subsequent owners for the remainder of the seven year period.

  • Bitplay33 on 27/07/2022 - 11:11
    +2

    Re the building inspector. You might sign a form absolving them of liability but this is invalid if common law rights are absolved. The rule of law can't be signed away.
    Building inspection firms do have public liability insurance. Hit them and don't be fobbed off.

  • Darayus on 27/07/2022 - 11:19

    $ 18K for repair just shell it out and get it done and claim from your IT return, otherwise, wait if you get a dogy tenant and if he brews meth then it will cost you more than $ 25K to replace all fittings that have been burned or damaged, paint wall, replace carpet or floorboard as no new tenant want to walk into that premises and mind you insurance don't cover this damage as the purpose of use was not residential and your REA is not responsible because he cants attend premises for inspection due to covid restriction and other government directives.

  • Eatslikeacat on 27/07/2022 - 12:31

    The purchase:
    The contract giveth the contract taketh away, blessed be the contract. If the contract says that you purchased 'as is' then you buy the property you buy the problem whether you knew about it or not. The vendor doesn't have to disclose anything to you unless it's required by law. For example, in NSW if it's a murder house or drug house and a few other limited categories.

    The building inspector:
    Building and Pest inspection reports have more disclaimers than actual content hah! They also have lots of caveats such as 'risk of undetected defects: high' and 'areas not accessible'.

    Other options:
    Your chances are not good and for your options you really need to consult a lawyer. $18,000 is usually not a profitable claim for a lawyer to take on. You might have a slim chance under Australian Consumer Law but that depends very much on what happened.

  • 82norm on 27/07/2022 - 13:05
    +1

    If 18k is the cost of defect/repairs, Iā€™d say that is cheap. By the time you even consider lawyers, going after the builder(s), collecting evidenceā€¦. Itā€™s not worth considering.

    18k is nothing when all is considered.

  • Aust on 29/07/2022 - 22:30

    Cant you claim the repair on tax?

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