Can flood-prone Queensland homes be sold without sellers or agents volunteering the soggy truth? Yes!

Published 25 May 10 05:41 AM | Peter Mericka 

OPINION
by Tim O'Dwyer M.A., LL.B
Solicitor
Consumer Advocate
watchdog@argonautlegal.com.au

 

What if sellers don’t ‘fess up if there’s no record of council inspections? They can sell regardless! What if a seller’s carport, garage or deck was built illegally? No selling worries! What if a home is termite-riddled? Don’t tell! And if sellers obtain a pre-sale building report showing heaps of problems? Don’t mention the report!

This is why “buyer beware” is the first unwritten rule of real estate in Queensland. Will it stay that way? Yes. Because Queensland’s government refuses to legally oblige home sellers to disclose material information to prospective buyers.

No matter that seven years ago the ACT Labor Government introduced reforms which (not unreasonably) require sellers, before putting a property up for sale, to give to buyers details of building approvals and inspections together with current building/pest inspection reports. The Northern Territory Labor Government is currently proposing to bring in disclosure legislation whereby sellers must (not unreasonably) give buyers swimming pool compliance certificates, flood information and reports on whether structures comply with building laws. And the New South Wales Labor Government will shortly require sellers (not unreasonably) to give buyers building/ pest inspection reports.

When a disgruntled homebuyer recently complained to Queensland Fair Trading Minister Peter Lawlor about expenses needlessly incurred because a seller and an agent failed to disclose building defects and illegal structures, the Minister’s unsympathetic reply merely stated the problem:

“While a real estate agent needs to verify the material facts when selling a property and encourage the seller to disclose all information, there is no obligation or legal requirement for the agent or seller to conduct building and pest inspections, or conduct council approval surveys prior to listing a property for sale."

“Pest and building inspections and council approvals are the responsibility of the purchaser,” he unhelpfully explained.

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Filed under: queensland, fair trading, disclosure statement, disclosure

Comments

# Tim O'Dwyer said on May 28, 2010 1:56 AM:

THIS COMMENT HAS COME PRIVATELY TO ME FROM A QUEENSLAND BUILDING INSPECTOR:

I am a building inspector on the Sunshine Coast and have been a resident / builder for 30 years the last 15 being involved in the building inspection industry.

Some of the issues I have encountered may help you add or put a different slant on the disclosure side of things.

Firstly I would not buy a property relying on a building report from a vendor.  In most cases you will find that if the agent organizers it you will have a report that says practically nothing and would only report on the structural aspect of the home. Agents pay particular attention to recommend building inspectors that just skim the surface and do not write comprehensive reports, so it does not effect the sale of the property.  Personally I don't believe that a real estate agent should not be able to recommend building and pest inspectors. Even though they recommend three in most cases they are the three softest inspectors in the area.  Some building inspectors particularly tailor their reports to not say anything. We have read many over the years that only comment on the structural aspect of the home when there is thousands of dollars worth of work in other areas.

All building reports have third party disclaimers so if a person purchases a property relying on the vendor building report they will not be covered under the inspectors insurance so they have no come back.

Building and pest reports have time limits and if the home is on the market for some time they may no be applicable.

The BSA legislation covering building inspectors would have to be one of the biggest jokes in the industry.  The BSA as a watchdog have license checks available on their web site to inform the general public if there a particular contractor has had any disputes lodged against them.  This does not work as most litigation against building / pest inspectors is done via the courts and it is not registered or recognized on the BSA site.  I personally know of many cases where building and pest inspectors have been sued multiple times even in one year and the BSA and the general public knows nothing about it.

As recently as today I had a real estate agent say that they met me on a job last year.  This home I inspected last year had footing and slab subsidence up to 60 mm out of level in the living room and visual areas where subsidence / cracks had been covered.  The agent was happy to tell me that another building inspector came along and found nothing wrong with property and it sold.  I was always under the impression that the real estate agent had an obligation to disclose this information that they gained via our inspection to any future potential purchasers.

I am all in favor of having homes sold that are fully compliant however in our area local council records do not go back more than 10 years in some cases.  Most building inspectors don't specifically point out to their clients possible changes or unapproved additions.  We do and we also write a disclaimer against unapproved additions.  We had a client that purchased a home in the local area.  We alerted him to the fact that there may be an unapproved roofed patio addition on the back of the home.  He checked with the local council and they told him there was no building records available.  Three years after he purchased the home the local council issued him with a compliance notice telling to have the roofed patio approved or remove it.  I still cant figure that one out.  So you can see that are flaws even in compliance checks.

If anyone really wants to make an impression and level the playing field to protect consumers the only way to do it is to produce an Australian Standard that fully protects the person buying the home.  It should be a standard that applies to all Building and Pest Inspectors so that all reports have the same format and building or pest inspectors are to write about structural faults as well as collectively report on minor defects and identify and possible unapproved changes or additions.

I have raised my concerns with the Housing Minister.  His reply was probably much the same as Garrets was to the insulation debacle.  He sent me a letter acknowledging my letter.  That was five years ago and no communication at all.   Although we have a new building inspection standard introduced last year it has done absolutely nothing to change the industry and get rid of the unprofessional element.

The same government thing happened when I was electrocuted in a ceiling with foil insulation approximately 4 months ago before they started running for cover.  The government insulation department would not even look into my complaint unless I could name the contractor.  The vendor would not give me the contractors name for fear of stopping the sale of their property.  I put it to them that I would provide the address of the property and they could track who the contractor was from the payment of the grant made to them.  They would not do this.  In the end I raised my concerns with the government electrical standards department some time later.  They said they would look into it immediately.  I have not had any communication since.

Hope some this information helps raise the standard

# George Rousos said on May 28, 2010 1:14 PM:

Buidling inspectors employed to carry out a building inspection, whether on behalf of a purchaser or vendor ( please note agents can only recommend and not refer) at all times, must carry out that inspection inaccordance with the Australian Standard (AS 4349.1). It forms a legal dcoument on behalf of the person/s who has instructed the property inspection to be carried out and whom is named on the report as the owner of that document.

Any fraudulent property inspection report is not only a criminal offence but the validity and legal responsiility of any property inspection carried out, falls solely on the shoulders of the building inspector.

To say that agents "pay particular attention to recommending building inspectors that just skim the surface and do not write comprehensive reports, so it does not effect the sale of the property", is nothing but slander and is not based on any material facts - It is pure here say by the writer.

In closing, to put all readers minds at ease, in the Discussion Paper Review of Conveyancing ( Sale of Land) Regulation 2005 here in NSW, it was discussed that if pre-sale inspection reports were to form part of vendor disclosure, that the validity of those reports be time limited?

For example, 3 months after the preparation of the report? Consideration should be given to a scenario where a fault arises after report is prepared but within the 3 month period, for both pest and building issues.

See below link for that Discussion Paper

http://www.lands.nsw.gov.au/__data/assets/pdf_file/0011/125984/P10_16_003__conveyancingV2.pdf

# Chris Warren said on June 1, 2010 11:56 AM:

There are certainly legal issues and complexities with owners arranging and providing their own  building and pest inspection reports to buyers. It is important for buyers to arrange their own independent inspections regardless. From an agent's point of view I see the real value of owners having their own pre sale inspections

as a safe guard for them. They may not be aware of any problems with their property. Knowledge is power, so on receiving a report they may be able to fix the problems. If time and money do not permit, then the problems can be disclosed up front to a potential buyer. When the buyer receives his reports

there should be no nasty surprises for the owners and there should be no cause for the buyer to renogotiate the contract price as so often happens these days.  

# Tim O'Dwyer said on June 3, 2010 3:09 PM:

A FURTHER COMMENT HAS COME TO ME FROM ANOTHER QUEENSLAND BUILDING INSPECTOR:

My apologies for the long winded comment but it may contain some helpful information.

I suggest that if anyone would like to do a study (perhaps Property Investor Magazine) of the way building reports are formatted and you will notice there is a vast difference in the way reports are written in all areas of Australia.  Have half a dozen building inspectors do a report on one property and see how acurate and informative they are.  You will find reports vary from light, general statements covering the property to professional acurate ones that report on everything.  No two are the same yet are acceptable under the same Australian Standard.

The Australian Standard for building inspections only represents a base line for reporting standards and does not require a building inspector to write an all encompassing report.  That is up to the inspector and his level of professionalism and respect for their clients.

The Australian Standard is written in a manner where the building inspector does not have to comment on minor defects, swimming pools, drainage, plumbing, electrical, appliances, air conditioners, asbestos content, smoke detectors, unapproved additions and many other areas.  33 specialist areas in all, and more areas are exclusions from the Australian Standard that most people dont even know about.  

The inspector is only required to walk around and through the property and visually report on defects in accessible areas and they are only obligated to comment on structural defects not collectively report on minor defects.  They do not have to touch or move anything and cannot probe or damage the vendors property in any way.  There can be a great deal of hidden damage / costs with a walk through structural only type report compared to a genuine comprehensive one even though the walk through still meets the Australian Standard.

Should you wish to do a history / license check on building inspectors this can be done via sites such as the BSA in Qld and bodies in other states.  In Qld the license history only covers building inspectors that have had directions made against them by the authority.  Unfortunately this information is not completely accurate as building inspectors can have action taken against them in a court of law and this does not get recorded on the authority site so there is no real way of the authority site providing accurate information on the past history / claims made against building or pest inspectors or their past preformance so the general public can know how good or bad they actually are.  We have common industry knowlege and experience of multiple claims made against inspectors and there is no record on authority web sites.

I have been involved in the building inspection industry for fifteen years and we have inspected over 15,000 properties in our area and dealt with more real estate agents that most people would do in a lifetime.  We have always provided acurate comprehensive reports and our clients are genuinely happy with our information and service.  The common word between some real estate agents in our area is that we are the worst building inspectors due mainly to the fact that we inform our clients about every aspect of the home even pointing out minor defects, areas that may need to be checked for approval such as the home, pools and unapproved additions.  We only provide accurate reports that give a overall indication of the condition  of the property and they are in no way worded to discriminate against the property in any way.  

Statements about being the worst building inspectors made by agents due to the comprehensive nature of our reports have been relayed to us by other agents, vendors and purchasers.  One time it escalated to a point where slanderous comments made about our company have even channelled through to my wifes workplace where I was going to inspection on a home for one of her work associates.  We have had to indicate to the particular agency principal that if these comments continue they will have legal action taken against them.  

The main problem for agents is that certain building inspectors produce reports that are too accurate and informative and this can jepodise the sale of the property.

Building / Pest Inspections is one of the only jobs where when you produce a report of highest professional standard you dont get referal from the majority of the market base eg agents.  Building Inspectors rely on business referal just the same as anyone else and if there is a way to gain constant agent referal by producing reports that do not cause problems with the sale of the home then there are persons out there that will do exactly that.  This is not heresay it is common knowlege and industry experience.

We met an agent on a recent job and they commented on the last home we were on.  It was on a sloping site and the floor slab was 70 mm out of level tilting down the slope of the site with other indications of movement and cracking on various areas of the home all supported by a poorly constructed retaining wall.  Doors throughout the home were out of alignment and even one brick wall had been replaced and was a different type of brick.  It wasnt too hard to spot as you walked downhill from the entry to the back of the living room wall across the width of the home.  Our client was happy that we had previous knowlege of the fault in the home.  The agent then went on to tell me that they sold the home to someone else and another building inspector did not pick the fault up.    I feel sorry for the new owner as they are unaware of a foundational settlement problem and a very costly repair.  We know this because we inspected the home several years before and had prior knowlege of the fault and a specialist report indicating works involved at that time.  We relayed this on to our most recent client.

I have experienced the attutide of agents in regards to building / pest inspectors for longer than most and the above mentioned examples are from personal experience and we are certainly not suggesting all agents act in the manner .

I have no agenda against agents personally but if you feel that the industry is squeaky clean then you might want to take another more detailed look or just turn on Current Affair.

I am commenting on facts and industry experience not heresay.

Best advice for getting a building report is do you research ask the building inspectors what they specifically check, how much time they spend on site and go for one that has extensive industry experience and a thorough comprehensive report.  Meet them on site and check their work and address any concerns you have.  Be sure to read the fine print on Building Inspection Agreements and Reports so you know where you stand should anything go wrong.  Disclaimers are written by professional indemnity insurers not by the Australian Standards.  If your name is not on a Building Report or Inspection Agreement then you have no come back if you purchase a home with anything other than your personal report.

# George Rousos said on June 4, 2010 3:01 PM:

In response to comment 12

http://www.apimagazine.com.au/blog/2010/05/buyer-beware-should-pre-purchase-building-inspection-reports-be-mandatory/comment-page-1/#comment-59

If any agent or building inspector for that matter was foolish enough to either botch a building report or as you say skim the surface, this would be completely absurd, because there negligence would come back to bite them and simply result in a lawsuit filed.

Further, if say I wasn’t going to rely on a vendor’s building report and decided to organise my own, what are the chances of me discovering that a vendor’s report was either botched or fraudulently prepared by either the agent or the building inspector involved??

I would say my chances of detecting the fraud, would in fact, be pretty high.

# Maureen Bullock said on June 6, 2010 4:50 PM:

I am a resident of Mackay where there are literally hundreds of homes that have no record of council approval.  It;s not that they were not approved at the time - it's that the council have lost the records AND they freely admit it.  The excuse is that over the years there has been many amalgamations and records just got lost.  I guess it doesn't help that our council records are sent around the country side.  If you want to get any record on your home here you have to get it from Townsville - over 400 klms away - and if they can't find it - tough!

Townsville is not even in our "Super council" amalgamation and it takes 10 days plus 2 way postage so a total of 14 - 16 days to get anything. Then if they don't have the records because they lost it - you still pay the $115 because  quote "you are paying for them to search - not paying for the result"

If anyone doubts this - ring the Mackay council and make enquiries yourself 1300 MACKAY.