Purchaser of property taking legal action re alterations & council consent

[twhite]

Hi there. I'm new to the forum so hope I'm posting in the correct place.

We have been contacted by the lawyer of the purchaser of a house we sold in 2015 who claims that we are in breach of the Vendor's warranties in a clause of the Sales and Purchase agreement. We carried out alterations to the house (removal of back door and two internal walls which were recessed into house area, framed up and closed in, removal of laundry window, framed up and installed new bifold door) and were advised by our builder that no council consent was required, however, the purchaser believes it was. They did not get a builder's report when they bought the house from us, but are now trying to sell the house and claim they cannot due to the work we completed (I assume potential buyers are getting builder's reports and seeing evidence of the work completed). We have gained a letter from our builder stating that the work was carried out to the building code and to that of a LBP builder, and he has verbally reassured us that the work did not require consent. We have not yet provided this to their lawyer.

The purchaser's lawyer has emailed saying that their client will be carrying out work to rectify the work done in Feb/March 2018 and will take this to district court to obtain the costs if necessary. Our stance so far has been that we acted in good faith based on what our builder told us at the time and believe they should contact the builder directly. They maintain the issue is with us and not the builder.

Any advice would be greatly appreciated!

[donna]

Hi twite - welcome to the forums.

Caveat Emptor I reckon. Really believe they needed to do their due diligence at the time of purchase and therefore don't have a leg to stand on. More so if they carry out work that essentially removes what was done by your builder. Of course I am not a lawyer so this is just my view. We do have a lawyer or two on here so they may comment for you.


I guess in retrospect you'd be feeling a lot more secure right now had you got the okay at the time of the works done rather than taking the word of a builder. Probably just about everything needs approval or that's how I view it when it comes to reno work.

I am sure they'll be lots more comments on this topic.

cheers,

Donna

[Davo36]

Everything is hunky dory whilst everyone is making money right?

But when things flatten off and someone can't sell a property for more than they paid for it, they start looking for someone to blame.

I reckon we'll see more of this sort of thing.

You don't say if you've engaged your own lawyer? Did the purchaser's lawyer contact you directly?

I'd say you need to take this to your own lawyer asap.

[artemis]

There is a useful summary of what needs consenting at this link.

http://www.building.govt.nz/assets/Uploads/projects-and-consents/building-work-consent-not-required-guidance.pdf

[John the builder]

twhite;
the work you describe is consistent with schedule 1 and if so your builder was right and it didnt need a consent

your problem is that you are now embroiled is a legal dispute that may bleed you dry if you dont act carefully.

They will likely also have an expert who says the work was substandard and structurally unsound. Once the work is rebuilt it will be hard to disprove? They could also just be seeing whether they can shake you down for few thousand and know that they have a poor claim?

Donna is partly right but asking council would not necessarily have got the right answer either and even if they agree you still dont have anything in writing.

The problem is in fact that damn clause in the S and P agreement that creates a contractual obligation. Perhaps 2 years ago is too long to invoke this and they are just gold digging? The courts would certainly consider the time to be a factor?

You need good legal advice! at the very least refute the claim and give them chapter and verse as to why they are wrong. They then have to weigh up the cost of legal challenge with likelihood of recovery?

when you do significant work it is a good idea to update the property file with a schedule 1 report with photos and updated floor plan so that there is transparency. Auckland council offer this service but i am unsure of other councils.

The warranty clause should at least say "a consent was obtained where one was required and the work was not exempt under schedule 1"
There is no legal requirement for a CCC to be issued and even if unapproved (and unconsented and it needed to be) it can remain as long as it is safe and sanitary. A CoA is possible but this is a voluntary process and you dont have to get one.


In hind sight; The real mistake is that that warranty clause should never be retained. Strike it out and initial the agreement or if you are selling delete it altogether and dont have it. There is no legal obligation otherwise. That clause is a trap for unsuspecting owners and otherwise as Donna says caveat emptor applies. A lot of owners get caught with not being able to satisfy the CCC for an old consent and this can be very expensive problem.

[ScottSI]

You have a lawyer threating you with court (scare tactic) and they will be hoping you settle generally due to the cost of going to court. Everything you send them is being collect for evidence against you. One wrong word, one poorly worded sentence and it will be used against you!

District court handles things up to 250K then you move to the High court and a trial etc will cost you generally 40 to - 60k in legal costs (district) and that doesn't include if they win costs against you on top of settlement.

If you don't have a lawyer get one ASAP and not some warm fuzzy person but a specialist litigator for the building industry style claims. It will cost you $ 400 to 600 per hr but will be money well spent (our one in Nelson was excellent and $ 380+GST p/hr).

I was taking a company under a civil matter in the district court last year and it is a minefield and still had to engage a litigator in the end and settled out of court.

No one ever wins going to court except the lawyers in civil cases.

[Shalodge]

Just a couple of observations.

The contract is between you and the purchaser .. not the builder. I assume the contract says that you warrant (accept liability for) that any building work has been done in accordance with the code. It doesn't matter if its Schedule 1 work or not, or if a BC was obtained or not .. it still needs to be up to code. The purchaser is saying that you had work done that was not up to code and this needs to be remedied.

The argument will be if the work done was , in fact, up to code or not. I suspect the warranty is strict liability, in other words it wont matter if you knew or ought to have known that it wasn't up to code.

Davo is probably right, a sale has fallen over mainly because the market is heading south and the prospective buyer is using the building work to get out of the contract. The vendor is pissed about that and wants some utu and maybe some compensation. You need some legal advice..

Observation: ..

There is no where near enough information to make a call on if the building work was Sched 1 or not. What JTB says is called 'confirmation bias".

Further observation: ..

If builders could be trusted we wouldn't need building inspectors?

Final Observation:..

When the tide goes out we will see who has been swimming naked.

[Rosco]

Hi twhite,

As others have put, be very careful of the legal process. From my experience even if you are in the right, it still can cost you thousands in costs to defend.

Getting good legal advice is essential.

Also maybe a quick check into other approaches. Such as if it was a company that sold the property, the company might now have no assets (if wound up correctly), so your lawyer showing them this might help.

Good luck

Ross

[Wayne]

Ask them for the evidence that the work wasn't up to scratch.
Point out that it didn't need a CCC under sched 1 of the BA and that you contend that it was up to code at the time.

If they change things now they would have to be very careful as they will destroy the evidence they will try to use against them.

[John the builder]

Shalodge we were told;

We carried out alterations to the house (removal of back door and two internal walls which were recessed into house area, framed up and closed in, removal of laundry window, framed up and installed new bifold door) and were advised by our builder that no council consent was required,

which part do you consider couldnt be under schedule 1?

Confirmation Bias????

i think lawyers and councils are more guilty of this?

as for me I have an open mind and I am making my comments on the facts provided not what i want them to be

[mrsaneperson]

Firstly not all lawyers are experts at these kind of specialist situations. So do not be in haste to book any lawyer without due diligence of enquiry to see if they are able and familiar with these types of cases.
Lawyers are just like any other trades people in that they often specialize only in certain fields, they also cost an arm and a leg in general so more diligence is required to ascertain they will be of benefit to your case before you engage their services.

My advice would be to do as much research as you can by Googling online situations similar to your own ,in effect doing your own groundwork in preparation, this will lessen your legal costs substantially and provide your lawyer with information they would have charged you their time for. In essence by posting your thread here you are already actively engaged in defending your case .If you feel confident enough with the information you have gathered you can represent yourself in court if it comes to that while the other side may shell out thousands of dollars in legal costs and still may or may not win the case .

[Perry]

Shalodge has mentioned it here, before: some sort of building ministry dept service for certain disputes.

Would that be of any use?

As Wayne pointed out: ask them to produce the evidence.

If the building dept. thingame has jurisdiction, you might tell them that you are considering referring the matter there.

Or, if under a certain amount, to the Disputes Tribunal.

I.e. Once lodged in the DC, you can apply to the Registrar to have the matter referred to the DT.

[John the builder]

yes a determuination under s177 of the building act except that in this case schedule 1 is not part of s177 but a building consent is or the need foir one

this also stops court action

risk is though that determination might go against you on a bad day depending on facts?? but better getting the building act decided by so0meone who know rather than a DC judge who doesnt and is swayed by the best lawyer.

second problem is that a ,past owner may not be a party to a determination and thus you cant ne the applicant but you can apply to the court to direct the MBIE to accept the application (but I cant remember the act ref?)

you could challenge the current owner to submit to MBIE?