will the bank approve loans for properties that have some unauthorised work?

[schrodinger]

Hi guys,

The sales and purchase agreement has the AS IS clause about the basement bathroom. I wonder if the bank will likely be ok with it or what will they normally ask buyers to do or just decline your loan approval? If they decline, what can you do to get them say YES to lend you the money?

If the unauthorised work has been done before 1st July 1992, will a safe and sanity report be enough for the bank to say yes or ?

Thanks a lot!

[Maccachic]

Have you asked the bank?

Work carried out prior to the Building Act 1991 was subject to Building Bylaws and the building permit system. Whilst it is not necessary to do anything about this work, if you are concerned that the unauthorised building work does not comply with the Building Code, you can either:

·
Obtain a building consent to demolish the unauthorised building works (N.B you do not



need to get a building consent if the building is detached (stand-alone) and is no greater

than 3 stories in height) refer to Schedule 1 of the Building Act 2004; and

·
If you wish, obtain a building consent before reinstating the work in question.

[Bluekiwi]

Nasty this, been there done that.

Depends how onerous the clause is, you will have some banks decline finance and others grudgingly provide it along with details.

But at a minimum you are going to need a Reg Valuation for the value of the property with the said unauthourised works taken out.

Or you could get a clause inserted saying that the vendor says he will get rid of these works before settlement date.
Whether you then enforce this is up to you.

If you can solve this problem, them you have an opportunity to get a good deal, so I always look for these clauses.
Especially where the clause is a lot more onerous, solcitor talk to cover themsevles, than the actual issue.

[mrsaneperson]

These situations are extremely common throughout NZ, they are a dime a dozen. I doubt if the banks will even blink an eyelid at it. I would just leave the "unauthorised works" as they are. If they are not creating any safety issues just leave it as it is.

[Bluekiwi]

These situations are extremely common throughout NZ, they are a dime a dozen. I doubt if the banks will even blink an eyelid at it. I would just leave the "unauthorised works" as they are. If they are not creating any safety issues just leave it as it is.

WRONG, big time.

Do not listen to this person.

If its on the S&P the banks will ask questions.

Run it past your mortgage broker.

[Damap]

Blue is right, BIG, BIG problem. Has cost me a fortune on 3 occasions. Get it legal or run Forrest run.

[mrsaneperson]

Well everyone has different experiences. Its a very common situation.Its also a very grey area with many variables.I had two properties with a similar situation to this, & never had bank problems .

[muntox]

It would probably be safest to talk with the bank, most people would be fine with a safe and sanitary report...
I mean if it's an old house there's bound to be some changes that have happened over the years.

With respect to the bank you should be able to get it pre-approved for a loan...

We got a loan without any issues, and ours has some major works in the basement with a clause in the S & P about it being "AS IS".
The bank was the least of our worries, you should be thinking about what hell you are set to go through with the council...

I would look at the works and try and quantify what was done before making any decision as well. and look at the property file for correspondence.

may we ask what are the additions? just a bathroom? is there a kitchen, major drainage or any structural changes?
you'd want to know if the council likely to say "your basement does not comply with the building code, please remove it"?

what did the engineer say when you sent them round to inspect it?

[muntox]

Nasty this, been there done that.

But at a minimum you are going to need a Reg Valuation for the value of the property with the said unauthourised works taken out.

Or you could get a clause inserted saying that the vendor says he will get rid of these works before settlement date.
Whether you then enforce this is up to you.

Thats very good advice!
I would still get an engineer to inspect the place if the changes are significant or structural though, even a pre-purchase inspection they would give advice on the changes and what it would likely mean with regard to the council.

[mrsaneperson]

Thats very good advice!
I would still get an engineer to inspect the place if the changes are significant or structural though, even a pre-purchase inspection they would give advice on the changes and what it would likely mean with regard to the council.

Nothing is absolute. And the expense of an engineering report often does not stand up in the overall perspective of things. I suggest you contact all the on-going victims of Christchuch earthquake insurance fix it problems who have spent 1000's on engineering reports largely to no avail, more added stress & huge expense . Open your eyes!

[muntox]

Nothing is absolute. And the expense of an engineering report often does not stand up in the overall perspective of things. I suggest you contact all the on-going victims of Christchuch earthquake insurance fix it problems who have spent 1000's on engineering reports largely to no avail, more added stress & huge expense . Open your eyes!

you're right, but I'm just saying do it BEFORE buying and then you get advice on how the changes look to someone with a bit of experience of council rediculousness...
if it starts to look like a minefield walk away.
at least you only lost $600 or so