Friend Purchased Land Which Was Previously a Dam

SBack on 14/02/2024 - 13:59
Last edited 14/02/2024 - 14:25 by 1 other user

Hello everyone, I'm reaching out for urgent advice on behalf of a friend who is facing a concerning situation with her property in Melbourne.

Here's the scenario:
My friend owns a titled lot and has recently signed a contract with a builder. However, during the builder's independent soil and survey report, it was discovered that the proposed residence is to be constructed over a previous dam, which has since been filled in. This unexpected revelation means that approximately 6 meters of screw piles are now required for construction.

Initially, based on the developer's engineering and compaction report, the estimated site cost was around $15,000. However, following the builder's soil and survey report, the site cost has skyrocketed to an estimated $40,000 due to severe site fill and fall resulting from the previous dam.

What's even more concerning is that this site condition was not disclosed by the developer in their contract, engineering reports, or compaction reports. Despite attempts to contact the developer for clarification, my friend has received no response.

Given the significant increase in site costs and the impact on their budget, my friend is understandably shocked and upset by this discovery.

We would greatly appreciate any advice or insights from the community on whether my friend may be entitled to compensation from the developer for failing to disclose the previous dam and fill condition.

Thank you all for your time and input.

Financial Property

Comments

  • pinchies on 14/02/2024 - 14:11
    +14

    1. What does the contract they signed say?

    2. Was the friend aware of the risks of the contract elements pending site inspection results?

    3. If the friend had been aware of this issue beforehand, would they have done anything differently?

    4. You are suggesting the developer is liable "failing to disclose" this issue. How do you know the developer was aware beforehand? When was the soil/geological inspection completed?

    • SBack on 14/02/2024 - 14:47
      +3

      Hi @pinchies, thanks for your input.

      • Regarding point 3: At the time of purchasing the lot in stage 2, there were other options available within the same stage, offering similar pricing. In hindsight, she could have opted for an alternative lot or waited for the release of the next stage. It appears that only a few lots were impacted by the dam condition in the estate.

      • Regarding piont 4: In the developer's engineering and GITA Inspection Verification Report (compaction report), tests were conducted on her lot, indicating a passing grade. Additionally, the developer's documents indicated minimal site fall and fill. However, according to the builder's report, there is a significant site fall and fill attributed to the dam condition.

      • JimB on 14/02/2024 - 15:12

        Minimal Fall and Fill is subjective. What is minimal to me could be significant for you.

        It's pretty easy to work out the Fall of the land if you're walking on the block.

        • Sinnerator on 17/02/2024 - 08:09

          if you have that talent/skill, many peope DO NOT
          some fall can be very subtle or deceptive pending surrounds
          do not ASSUME everyone on this planet is a carbon copy of you

          • JimB on 17/02/2024 - 08:19
            -1

            @Sinnerator: Thank you.

            However if you don’t possess those skills (and even if you do) you should get someone with more some experience to help you buy what could be the most expensive asset you’ll ever buy.

            There are so many pitfalls that could arise when buying a block and building a new home.

            Having said that, buying a block with some fall isn’t the worst thing in the world. You just have to factor in some extra costs. It can look better than a flat block,

      • Amaris on 14/02/2024 - 15:44
        +9

        In the developer's engineering and GITA Inspection Verification Report (compaction report), tests were conducted on her lot, indicating a passing grade. Additionally, the developer's documents indicated minimal site fall and fill.

        If your friend relied on the report that was attached to the contract, shouldn’t she be speaking to the professional who did the report, as it would’ve been an independent report

        • Chandler on 15/02/2024 - 10:55
          +17

          "independent"

        • SBack on 16/02/2024 - 10:44

          as per developer's engineering team who prepared geotechnical report, they have attached a letter from their Geotechnical engineer confirming that all the fill areas, including old dam areas were stripped and filled in accordance with AS3798.

          • pinchies on 16/02/2024 - 15:42
            +2

            @SBack: So, then we have a conflict between the developer's geotech and the builder's geotech. They need to sort their beef out, decide who is right, and then if the developer has misled you, you have a leg to stand on…. depending on what is in the contract.

      • RTX9090Ti on 15/02/2024 - 13:40
        +6

        Was the developer who sold the land Chinese firm?

        • SBack on 15/02/2024 - 16:51

          @RTX9090Ti I believe so

        • ninnypoop on 15/02/2024 - 22:06

          Why so?

      • pformag on 15/02/2024 - 10:52
        +45

        OP and "Friend" is the same person.

        • suzley on 15/02/2024 - 12:41
          +1

          Could be imaginary friend.

        • skidexa on 15/02/2024 - 14:54
          +1

          Meh who cares who it is

        • SBack on 15/02/2024 - 16:53
          +4

          @pformag a friend in need is a friend indeed

          • Leeeroy on 15/02/2024 - 17:01

            @SBack: Love it! Now I'll have that song stuck in my head.

          • pformag on 15/02/2024 - 19:02
            +3

            @SBack: hopefully they have weed

            • Kangal on 16/02/2024 - 20:56

              @pformag: .
              Perhaps one with breasts, and all the rest ?

          • bigbadboogieman on 16/02/2024 - 05:55

            @SBack: ….100 points if the friend brings weed

        • HeWhoKnows on 15/02/2024 - 20:53
          -2

          So split personality, right?

      • MrThing on 15/02/2024 - 19:58

        OP and his friend are the same person

      • callum9999 on 15/02/2024 - 21:29
        +9

        Because, shocking I know, some people care about their friends and like to try and help them out when they are in need.

        I know I've noticed Australian society becoming significantly more isolated from each other and less caring over the last decade, but surely we're not at the point where "stuff 'em, let your friend sort their own life out" is seen as standard yet?

      • DeeTrance on 15/02/2024 - 22:36
        +5

        Why don't you mind your own business and move along to another topic.

  • DashCam AKA Rolts on 14/02/2024 - 14:16
    +53

    What's even more concerning is that this site condition was not disclosed by the developer in their contract, engineering reports, or compaction reports. Despite attempts to contact the developer for clarification, my friend has received no response.

    Better get a lawyer, son
    You better get a real good one.

    • SBack on 14/02/2024 - 14:51

      @DashCam AKA Rolts Thank you for the advice. They're considering seeking legal counsel, although they are concerned about the associated costs and time involved. If you have any recommendations for a reliable lawyer experienced in this matter, I'd greatly appreciate it. The situation has already caused significant stress, and hoping for a swift resolution

      • Mechz on 14/02/2024 - 15:34
        +36

        25k extra for foundations is probably cheaper than litigation.

        Build and flip it of they're worried I reckon.

        • Steakz on 14/02/2024 - 16:46
          +2

          If everything else fails, then I still wouldn't consider legal proceedings. Way cheaper to just fork out the extra $$$.

      • marioland on 15/02/2024 - 14:36
        +2

        When we built the soil test came back and required screw piles as well, and there wasn't a dam there before. They just said it's soft soil and need 3m screw piles for which we had to pay an extra $20k than initially quoted. We did and moved on.

        • brad1-8tsi on 15/02/2024 - 16:33
          +3

          My BIL is a builder. He demolished a concrete slab house that had been onsite for 40 years without any movement of cracking issues. Engineer insisted on 22 screw piles for the new build. It's just the way it goes.

  • jv on 14/02/2024 - 14:24
    +34

    the proposed residence is to be constructed over a previous dam

    Oh dam !!!

    What's even more concerning is that this site condition was not disclosed by the developer in their contract, engineering reports, or compaction reports

    https://media1.giphy.com/media/cqxykQPwOmxKd5Z1FH/giphy.gif

  • Amaris on 14/02/2024 - 14:48
    +3

    What's even more concerning is that this site condition was not disclosed by the developer in their contract, engineering reports, or compaction reports.

    You said the developer had an engineering and compaction report done. Why do think the developer needed to say the area was a dam previously?

    • SBack on 14/02/2024 - 14:57

      Hi @Amaris,

      The concern is that if the area was previously a dam, it could significantly impact the stability and construction requirements of the site, which would affect the overall cost and feasibility of building on the lot. Transparency about such conditions is crucial for informed decision-making and budget planning. Therefore, it's essential for developers to disclose any significant site history that could affect construction plans and costs. According to the builder, it's common practice for estate developers to indicate water catchment areas or dams in estate planning diagrams, this information was not specified in their documentation.

      • Amaris on 14/02/2024 - 15:09
        +11

        I agree that it's important to the buyer. However, is it a legal obligation on the part of the developer? You said a report was provided regarding the soil and compaction. I'd think the developer, while not being completely honest, has provided the minimum 'disclosing' that was required

        • CodeExplode on 16/02/2024 - 22:25
          +1

          Humanity can be so goddamn frustrating and depressing.

          "Oh nobody specifically said that I needed to not mislead you by omission in this way, what are you complaining about?"

      • apey2000 on 16/02/2024 - 01:36
        +2

        caveat emptor

  • cashless on 14/02/2024 - 14:57
    +12

    be entitled to compensation

    Why is this always the first question when someone makes a mistake by not reading the purchase contract or by doing proper research?

    If the contract did deliberately hide the fact that there was a dam under the plot, then you are going to need a lawyer way, way before you start talking about compensation.

  • Drakesy on 14/02/2024 - 15:00
    +1

    The site cost has skyrocketed to an estimated $40,000 due to severe site fill and fall resulting from the previous dam.

    So what's the problem the severe site fill or fall?

    not sure what severe site fill means

    Fall - would relate to the lay of the land, would be picked up at purchase inspection time.

    • angelkulit025 on 14/02/2024 - 15:16
      +1

      i think they don't want to shoulder the $25k difference

    • SBack on 14/02/2024 - 15:28
      +1

      Hi @Drakesy. The problem is due to site fill (I think more than 3m). site fall is > 500 mm. This snippet from the report done by the builder

      Additional reinforcement should be given sufficient strength to withstand a theoretical soft spot of 3.0m.

      At the time of this investigation, the top 300mm was considered as poorly compacted fill.

      • Drakesy on 14/02/2024 - 15:58
        +2

        Also site fall would've been something that the buyer agreed to when they purchased the land as is, it's not some unknown prior to sale.

        So the site wasn't compacted with each lift as per Australian standards is what i'm guessing they're going for/they're treating the site as non-compacted fill is what they're going for. If they had the documentation and supporting evidence prior to sale and didn't inform you it may be considered negligence as they were hiding the true condition. If they didn't then it's on the buyer, the condition would be contained within the contract.

        To me though the builder is taking the conservative approach as they've flagged a "theoretical soft spot" at 3m and the top 300mm not compacted - easily remediated by re-rolling the top layer.

        At the end of the day its on the buyer to do the due diligence :) i love the new attitude to life that everyone is wrong but me.

        • SBack on 14/02/2024 - 16:09

          Hi @Drakesy, thanks for your reply. according to the developer's report, the site fall is about 200 mm, and no significant site fill. As per the builder's report site fall is about 500 mm and the site fill due to the previous dam. This is conflicting from the developer's reports.

          • Nugs on 15/02/2024 - 14:39

            @SBack: 300mm of settling since initial report?
            .

  • bmxr on 14/02/2024 - 15:00
    +1

    Was there a geotechincal report prepared at the start of the project by the developer to support the subdivision application and approval? It should still be available on the Council website.

  • netjock on 14/02/2024 - 15:14
    +11

    Build 1 story above ground and 2 stories of basement. Don't put good money to waste.

    This one puts DYOR to a whole new level.

    Might want to check what they did with the old dam walls. You don't want the place to turn into must with a bit of rain because they didn't decommission the damn walls and they are still there.

    • kiitos on 15/02/2024 - 15:12
      +2

      Are there walls in these sorts of dams? I'm picturing agricultural ones which are just very large pools of water and no walls, just earth?

      Edit: I'm probably wrong, I suppose lots of farm dams are made by damming a waterway, as the name suggests!

      • netjock on 15/02/2024 - 16:50
        +1

        A lot of agricultural dams are not that deep. Probably 3m deep unless it is a natural dam.

        Would be interesting to look into the detail.

        If you are going to go that deep might as well try something innovative. I'd see if you can get a slab at the bottom and use the 3D concrete printers to print a cylindrical structure walls for basement, plus circles are best for strength (it is why they make tunnels round not square) and have 2 floors of underground living.

        Would be interesting in summer to pump the cold air out to use as natural air con.

  • JIMB0 on 14/02/2024 - 15:16
    +1

    Why didn't they go through Google earth historical photos to see what was there before?

    • SBack on 14/02/2024 - 15:33
      +2

      @JIMB0, The lot was booked in 2021 and got titled in 2023. The new address is allocated only towards land title. Also, this was a first-time buyer with not a lot of property knowledge. While Google Earth historical photos may provide some insight, it's challenging to pinpoint specific details, especially if it's your lot or your neighbor's lot. Indeed, it's been a very expensive lesson learned.

      • Tleyx on 16/02/2024 - 15:42

        You can use gps coordinates, you dont need an address

  • Dollar General on 14/02/2024 - 15:40
    +6

    Your friend would have used a conveyancer or lawyer during the sale process. Go back & ask if it should have been disclosed or go see a lawyer.

    Free legal advice from bargain hunters is not the best solution here when large sums of money are at stake

    • SBack on 14/02/2024 - 15:50
      +1

      @Dollar General thanks. They consulted a reputable conveyancer who, unfortunately, stated they could not provide legal advice on this matter. Additionally, the conveyancer was unable to find any mention of a dam during the land title search.

  • mskeggs on 14/02/2024 - 16:11
    +18

    All the comments here are reasonable, but I’d make the point an extra $25k on a house build is very much small potatoes. An acquaintance had a $110k variation for foundation work on a build, I thought that was rough.
    Probably up for more than that if they change their mind on the tapware.

    • DGrayson82 on 14/02/2024 - 16:22
      +4

      I was about to post the exact same thing. $25K is nothing nowadays, a mate of mine built a single storey on a small block of land and it cost him around $35k in site fees.

      Some builders offer fixed site costs so it might be worth looking into that

      • Ghost47 on 14/02/2024 - 17:00
        +2

        $25K is nothing nowadays

        I have to disagree despite this mentality being somewhat rife when it comes to the pursuit of housing. $25k may not seem like a lot when compared to the entire value of a house or if you're on a $300k salary, but I would still argue $25k is still a decent chunk of money in real terms.

        If you earn $7k a month (which would be something like $130k p.a., which is a pretty decent salary) that's about 3-4 months worth of post-tax salary. 3-4 months of spending zero to save that money up. If $25k isn't a lot of money, would you be willing to go and donate that amount right now to a charity without flinching? I don't think most people would, even people on $300k salaries.

        If $25k was "nothing" that implies our currency is hyperinflating, which should mean a litre of milk should cost something like $30 or a takeaway coffee should cost $50. Would you accept those prices? Most items haven't inflated that much, it's just housing which has completely detached from incomes.

        • star-ggg on 14/02/2024 - 18:20
          +14

          25k is nothing compared to how much they're paying for rent while litigation plays out + the lawyer fee on top

        • redfox1200 on 14/02/2024 - 21:20
          +3

          would happily go donate 25k if i was going to get the value back double in 10 years

      • surg3on on 15/02/2024 - 15:04

        Can I have $25k? No. Thinking of $ as a % of total spend is stupid unless its a % of your post tax earnings.

      • TilacVIP on 15/02/2024 - 20:41

        Maybe for you it may not be, but to others, in this case the Buyer, it could (and seems) to be a huge amount in the context of things.

    • JIMB0 on 15/02/2024 - 09:45

      They'll also end up with a house on screw piles. Who knows, maybe a different builder would have just gone ahead with normal foundations and they ended up with major issues down the road.

  • TheRealCher on 14/02/2024 - 17:14
    +2

    Houseboat for the win!

    • Nugs on 14/02/2024 - 17:24

      nekminit - mooring fees for my houseboat have gone up, what are my options
      .

      • TheRealCher on 14/02/2024 - 17:25

        Dude trying to sell his untitled land on another thread. Get in touch, connect electricity to public bbq, charge 30c more than Woolworths for coke, profit….

  • Daniel Plainview on 14/02/2024 - 17:18
    +6

    On such high $$$ matters why cloud things by coming to a bargain forum for advice?

    Seems contradictory how the OP can say the buyer is concerned about the cost of a lawyer when they're looking at a much higher bill for the additional property costs. I doubt the lawyer will end up costing more than a few thousand as they'll tell you if you have any basis early on. Perhaps I missed it but what have been the result of bringing this matter up with the developer & the person who prepared their soil reports?

    I suspect unless there's obvious culpability, which it seems there is not - their attitude will need legal sway to get any funds - and in which case getting to a lawyer earlier might be needed. But as others have said it really becomes a situation where if it comes to THAT you're likely better off putting it down as a teaching moment - as bad as that sounds.

    I think there's some very helpful folks here but on such matters I think going straight to a bonafide expert is more than warranted or atleast raise with the developer and try and resolve a win-win outcome.

    • SBack on 14/02/2024 - 21:27
      +1

      Hi @Daniel Plainview, thanks for your comment. My friend did reach out to developer and also copied their engineering team who originally did engineering and compaction report. It has been 3 weeks but no response from developer this includes 3 follow ups.

      • garetz on 14/02/2024 - 22:08
        +6

        They are never going to respond in case they incriminate themselves and from their perspective they never should.

        get together with the other parties who are affected and litigate.

        • Daniel Plainview on 15/02/2024 - 08:35

          Almost certainly correct, they'd be using their own lawyers pretty regularly and as such would treat such matters as we'll only respond if they need to. Which stinks and for them the legal costs are business expenses but this is why I'd perhaps try and set up a face to face with someone over at the developer to discuss a mutually fair resolution, if it goes to hardball/lawyers you guys will certainly end up blinking first.

  • Agarwal on 14/02/2024 - 19:36
    +3

    Get onto Barnes Wallis

    • miwahni on 14/02/2024 - 22:50

      The Dam Busters guy? I saw what you did there….

  • AndyC1 on 14/02/2024 - 19:51

    Sounds like a lawyer is required.

  • Dollar General on 14/02/2024 - 21:30
    +1

    Being Melbourne based, just call into ABC radio Melbourne free legal advice on Tuesday mornings

    • SBack on 14/02/2024 - 21:36
      +1

      Thank you @Dollar General, this is useful. shall try that.

  • noob999 on 14/02/2024 - 21:57
    +8

    You need a Sinking fund!

  • Rob-4x4 on 15/02/2024 - 08:09

    Is it possible to build a different sort of house rather than simple on slab that is better suited to the ground ?

    • SBack on 15/02/2024 - 08:12

      Hi @Rob-4x4, thanks for your message. They have reached out to other builders as well but most of volume builders have same approach.

  • nswnotill on 15/02/2024 - 10:49
    +2

    If all else fails, maybe construct a home on screw piles, that are of a depth recommended by appropriate engineer. Maybe not all piles need to be 6m. deep.
    Construct a home with a suspended floor of either wooden or steel components, suitably bolted to the piles. All service plumbing is then under the building. Near completion arrange for slats to be fitted around the outer piles under the building.
    There is no need to level the site or undertake any significant earthworks under the house. If there is any significant movement in later years, the floor frame can be levelled by jacking and fitting of spacers.

  • squaredonut on 15/02/2024 - 11:25

    Like everyone has said, seek professional legal advise.

    However the $25k difference, it's not a massive amount in a build, but it's also not small for someone who doesn't print money right, but this is the spate of how there are so many dodgy aspects in society. Maybe see if they can get a free initial consult with a lawyer, ask them what their stance on it, and how much time + costs would be involved to fight this. If the time is a lot and costs is a bit, then you might as well just swallow this one.

    • SBack on 15/02/2024 - 12:57

      Hi @squaredonut, thanks. $25k is almost 6 months hard earn savings. Will get legal advice.

  • ttt888 on 15/02/2024 - 12:36

    Hmm is extra 25k site cost that bad for a total of 40k? I thought many houses on established areas knock down rebuild will cost you at least 40k site cost… Best to have screw piles or concrete piers.

    Sounds like you are more worry about previously been a DAM, but that's an emotional decision that's all, you worried in future the whole area may sink and now just finding ways to bail out.. (which is unlikely unfortunately)

    So you need to decide are you really worry about the site cost or future issue that may or may not be an issue..

    • SBack on 15/02/2024 - 13:03

      Hi @ttt888, $25k is almost 6 months hard earn savings. Just imagine the upgrades you could make to your house with that amount, upgrades that could potentially increase its value when you decide to sell. Unlike spending $25k on site costs, which won't be reflected as upgrades and won't offer any return on investment. I'm not concerned about the house sinking because it will be built to Australian standards and covered by insurance. My main concern is the lack of disclosure from the developer, which could have influenced my friend's decision-making process. If she had been aware of this information, she could have made a more informed decision and planned her budget accordingly, perhaps even selecting another lot.

      • ttt888 on 15/02/2024 - 13:37
        +1

        Ok so the worry is you think you suddenly got to pay $25K more..
        I suspect the issue is with your builder, site cost is NEVER fixed until you do a soil test etc (unless its fixed cost build model where many builder went bust during covid boom).. Builder now saw the dam report of course he want to charge you more. probably additional piers etc cost only 10-15K but he charge you 10 K more since he knows you have no choice.

        But seriously 15K site cost in 2024 is really that cheap? hard to believe..

      • stringbean402 on 16/02/2024 - 11:37

        I think the way to look at this is the 25k needs to be spent regardless. It's not enough money to stall the build and fight over.

        The house should be fine if it is built with the 6m screw piles as required. The problem has been identified and an engineering solution devised to overcome it.

        However by all means seek legal advice, allow some letters to be sent by your lawyers, it's worth dropping a few thousand on legal fees to see where it ends up. But be realistic in that if you choose to spend money on lawyers there is a very good chance you will never see it again.

        The developer may have recourse against the geotech engineers or be able to shift their liability to them, the geotech engineers might be willing to come to the party over what is in the scheme of a development a small amount of money. There may be liability insurances that are able to be claimed on due to the deficiencies in their report. See if you hit a brick wall or if the developers/engineers want to avoid litigation themselves they might come to the party. But don't throw good money after bad.

  • Foma2 on 15/02/2024 - 13:31
    +1

    Just build a house and in 10 years time you will be absolutely happy with the price you paid cause real estate prices will be much much higher than now. I paid 20k extra due to soil conditions 12 years ago. Now I am laughing.

    • ttt888 on 15/02/2024 - 14:09

      to think you only have to pay 15K for site cost in 2024 I wonder what sort of slab,foundation you are getting . bare minimum..

      I suspect OP's friend got suck in by the builder with low price but when it matter builders will throw out the extra $$.. which is not uncommon.

    • SBack on 16/02/2024 - 07:34

      Thanks @Foma2. That's one way to look. However, for someone building house for the first time, this is shocking!

      • Foma2 on 16/02/2024 - 08:12

        I know. It was my second house I built so I was mentally ready for variations.
        When I had my first one built I was sweating over extra $200. It was quite a while ago but still.

      • Foma2 on 16/02/2024 - 08:16
        +1

        And one more comment from me. Going down legal case is not worthwhile. I am telling you this as a person who won 3 civil cases in Magistrate Court and one in High Court (or whatever it is called). I did it by myself. And I can tell you - never again. It was extremely painful and frustrating experience to say the least. Our legal system is absolutely [profanity]. So, stay positive. Keep away from blood sucking parasites (aka lawyers), and keep moving.

  • 82norm on 15/02/2024 - 13:54

    A QC, SC or now KC barrister charges around 3-5k per day, back in 2015. Do the maths and fork out the extra cash for the foundation/screw piles.

    If it went to court it could take months if not years for an outcome.

  • BrownDad on 15/02/2024 - 16:16

    what's the location? and the developer?

    • SBack on 15/02/2024 - 17:08

      Hi @BrownDad location South East Melbourne. DM you developer name
      edit: It looks like I can't message you directly and can't publish developer's name on public forum.

  • DiscoJango on 15/02/2024 - 17:46

    op's friend is my friends friend, its true, i was there, so was my friend.

  • mattmel96 on 15/02/2024 - 18:44
    +2

    Have you considered getting another report;
    * The first you could consider to be biased to the developer,
    * The second you could consider to be biased to the builder,
    * A third would be completely independent.

    Then assess them all against each other. If the third supports the developers claim, your builder is try one over you. If it aligns with the builders, you have more ammunition to support redress by the developers.

    • SBack on 15/02/2024 - 21:02

      Thank you @mattmel96. I will pass your advice. This option should be explored to get a third independent report.

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