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

  • Typical16-bitEnjoyer on 15/02/2024 - 19:03

    Do you honestly think the developer is going to respond and go "oh shit, my bad, here's a cheque"

    Obviously the developer bought crap land and subdivided said crap land, and would have spent big $$$ to do so.

    Pay up or lawyer up.

    • SBack on 16/02/2024 - 07:32

      @zeggie, thanks. Yes, looks like one of these two options.

  • KaTst3R on 15/02/2024 - 20:42

    Like any good project manager, you put a 10% - 15% contingency on total cost and this will be the likely final number.

  • MrPants on 15/02/2024 - 20:58
    +1

    Friend Purchased Land Which Was Previously a Dam

    Damn!

  • bargain_knight on 15/02/2024 - 21:50
    +2

    I previously burnt $400k on a court case that was settled before trial. For the amounts you are talking about it's not worth engaging lawyers.

    You could just threaten a lot and go to VCAT on your own. VCAT is a no costs jurisdiction. They may settle with you to save on their legal costs.

    Your best bet is fighting this using Australian consumer law. Read the act. Particularly around misleading and deceptive conduct. Their argument will be this wasn't foreseeable and they may have a point.

    • SBack on 16/02/2024 - 07:18

      Hi @bargain_knight, sorry to hear that. $400k is big amount. I hope you recover from it quickly. Yes, I'll suggest them to go to VCAT. Thanks!

      • CalmLemons on 16/02/2024 - 13:04

        They will waste more time and effort fighting it.

  • OzzyOzbourne on 15/02/2024 - 23:00
    -1

    The Australian government virtually guarantees the property value doubling every 7 to 10 years due to immigration and insufficient property and infrastructure. Why worry about a few k

    • SBack on 16/02/2024 - 07:24

      Hi @OzzyOzbourne, you raise a valid point about the potential for property values to increase over time. However, it's essential to consider factors like taxes, bank interest, and depreciation over 10 years. While property values may increase, it's important to weigh the immediate impact of additional costs. Additionally, the value of $25k today may not be the same in 7-10 years.

    • drfuzzy on 16/02/2024 - 11:07

      You'll be sadly disappointed if you expect doubling with that frequency over a long time horizon.

  • PaperplaneXXX on 16/02/2024 - 05:50

    A friend didn't do proper due diligence investigation before buying a land! no complaints now…
    its signed and stamped.

    • SBack on 16/02/2024 - 07:30

      @PaperplaneXXX, I appreciate your input. They did engage a conveyancer in 2021 to review the contract, and the land was titled in 2023. However, legal jargon can be challenging to decipher for those without legal expertise. That's why they sought professional advice. If the information about the previous dam condition wasn't clearly disclosed in layman's terms in the contract, it would have been difficult for them to uncover during due diligence.

      • Mistredo on 16/02/2024 - 12:33

        If the information about the previous dam condition wasn't clearly disclosed in layman's terms in the contract, it would have been difficult for them to uncover during due diligence.

        Would it? There are development plans that include this kind of information. These can be easily sourced from Land.Vic or local councils.

        • SBack on 16/02/2024 - 15:25

          Hi @Mistredo, emailed Cardinia Shire Council and they redirected to DBDRV.

          • Mistredo on 16/02/2024 - 17:14

            @SBack: You probably didn't ask just for development plans if they are redirecting you to DBDRV.

            • SBack on 16/02/2024 - 17:30

              @Mistredo: Hi @Mistredo, sorry to clarify further, but do you mean need to request the council for whole estate development plans?

              • Mistredo on 16/02/2024 - 19:58

                @SBack: Yes, I was saying one should check development plans before buying a block of land as part of due diligence. It's too late now.

    • CalmLemons on 16/02/2024 - 13:03
      +1

      This.

      When you buy land, it’s on the onus of the purchaser to ensure the site is suitable to build and to access build costs and allow for contingencies

      $Extra 25k is nothing for additional size costs.

      A lot of sites require screw piles it’s just the way it goes. Rather that than some floating waffle pod slab on sandy soil

  • tonsta on 16/02/2024 - 09:28
    +1

    Dam developers!!!!

  • drfuzzy on 16/02/2024 - 11:06

    Caveat emptor

    I had a situation where the additional cost was far higher than $40k.

    Learn from the mistake and move on.

    • SBack on 16/02/2024 - 15:18

      Thanks for sharing your experience.

  • Rukiata on 16/02/2024 - 13:46
    -1

    how are you allowed to sell a land dam thingy, if you build a house on it what happens if it falls apart? idk that's scary. I've never heard anything like this before, it seems strange.

    • SBack on 16/02/2024 - 15:20

      It is not uncommon to fill the dam and construct house. Builder need to give structural guarantee as per Australian standards.

  • jerjergege on 16/02/2024 - 13:52

    Just remember if you go to court usually the opposition even if they lose, do not pay your for your costs, you most deffinitly will pay more than 40k in legal fees.

    A case I had was ~80K.

    EDIT: Not to mention the time involed, over 3 years.

    And time off to meet with lawyers, site inspections, engineers report, plumbing report, cutting concrete to inspect, fill in concrete, only to get paid peanuts, and to rectify my issues I am in the negative.

    • SBack on 16/02/2024 - 15:21

      Hi @jerjergege, sorry to hear and thanks for sharing your experience. Definitely not worth wasting 3 years. It is just frustrating that developer did not disclose the facts.

    • Mistredo on 16/02/2024 - 17:15

      Why doesn't the opposition pay for your legal fees if they lose?

      • jerjergege on 18/02/2024 - 23:48

        Its decided by judge on a case by case basis.

  • porsche26c on 16/02/2024 - 19:26

    Think of paying 40k over 30 years. Not much. Just do it and do it properly. Maybe design your house so not needing so much site remediation.

  • Korban Dallas on 16/02/2024 - 21:27
    +1

    6m of screw piles is going to be more like 50k cost.

    Each one 6m or 6m? in total. There is a big difference.

    Trust me I am an estimator

    Soil tests are like $450. Should have got one before purchasing the land. Heck there maybe even one on file.

    Was your friend aware it was a former dam? Could ask for a reduced price from the developer.

    Can't argue with the slope though.

    Should have provided level 1 compaction.

    Poor form.

    What is the soil class E? H2……?

    Implement slope sensitive design.

  • elonmusk on 16/02/2024 - 21:44

    I purchased a lot out in western Sydney which used to be a dam as well. When it came time to build we also faced additional costs due to the extra piering requirements and extra site costs (e.g. removing more fill/soil) - this all of course was due to the fill/soil conditions.

    My advice is that you should just work with your builder on these additional costs. Look at alternatives such as screw piers instead of concrete piers, its much more cheaper and also means their is less fill/soil for the builders to dig and remove. Plus remember your builder also has their margins which they're probably adding onto these additional costs too.

    In terms of the build itself, screw piers are no different to concrete piers (in terms of their purpose of course). They are both recommended by engineers on lots which have such fill/soil conditions. If you already have the engineering plans for your build, I guarantee you the engineers have provided the builder with both options of concrete piers or screw piers.

    • Korban Dallas on 16/02/2024 - 22:50

      6m screw piers will require 12m of bored reinforced piers.

      It can be cheaper but there is a point where it goes the other way.

  • Logical on 16/02/2024 - 22:31
    +2

    So it went up from 15 to 40K…up only 25K. That's chicken feed when you look at it holistically. The excavation alone for my place hit 50K then add the 49 cubic meters used as a blinding layer for my footings and another 30+ cubic meters for my footings. Around $100K spent and you still didn't see anything coming out of the ground.

  • paloverde88 on 17/02/2024 - 11:20

    someone purchased land which was previously an underground Aquarium!

  • FlyingMiffy on 17/02/2024 - 16:03

    Soil quality is a dice roll. When building a house, the estimate at pre-soil test is basically an average of the site costs experienced by the builder in similar areas, its got very little to do with the actual site. In the grand scheme of things, a 40K site cost is likely to be less than 10% of the total and probably should be within the contingency budget. The the site has a fall, wait until they get the estimate for a water pump based on council and estate requirements to force flow to the LPOD. That alone will be another 20K.

  • Nirmitha on 17/02/2024 - 18:57

    The law protects developers very well. There's not much you can do if their descriptors are inaccurate.

    In estates like that River Valley one near the Sunshine North quarry, land buyers got whacked with 100k+ site costs for years (as they released their land stage by stage). There are VIC land estates where plenty of key bits from the estate 'masterplans' never end up being done (lake, playgrounds, dedicated school area, park space, bike lanes). Title date estimates are usually wrong by years (not even months). There's a lot of deception and very few consequences.

    The developer or potentially paid-off soil tester should be liable since their report didn't identify this info. Issues like this/developers selling homes with hundreds of hidden defects aren't new. Whole space is a cesspool, land or builds. If a developer has touched it, be wary. Regulators know - but these aren't glamourous vote-winning subject matter to be worth fixing.

    You are then left with impotent entities like the VBA or VCAT where your case won't even get looked at for a couple of years.

    Will be pretty hard to chase. Esp since the land is already titled and likely settled, no real options available other than getting a 2nd opinion (another soil report) or going with a builder with fixed site costs (the contract likely will still have caps).

  • zeoko on 17/02/2024 - 22:10

    Additional $25k for site costs are common in building industry. It happens for various reasons. If developer did his minimal duty as per law, then it's not worth spending time, money and peace of mind going legal. If on home loan, how much difference would this cost your friend? Lesson learnt, move on - would be my advice to your friend.

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