When the case for due diligence is a must for conveyancers

OWNER-builders who fail to meet state and territory building acts by obtaining the necessary compliance before selling their property can be a serious liability for conveyancers, buyers and themselves.

“Compliance is critical as building works undertaken without the required approvals, permits or inspections can expose parties to significant legal and financial risks,” Tania Gooley, from Victorian-based Chambers Conveyancing, said.

“Where works are carried out by an owner-builder, the level of risk and disclosure obligations significantly increase from a conveyancing perspective.”

Gooley said some of the major red flags for conveyancers arise where an owner has undertaken building or renovation works themselves, particularly where there is limited supporting documentation or inconsistent disclosure. 


“These red flags may include fresh renovations with no documentation available; vendors stating the works were completed by a friend, DIY, or that they didn’t think permits were needed,” Gooley said.


”A property marketed as ‘fully renovated’ with no evidence of approvals, obvious structural alterations, converted garages or additional bedrooms and vendors being unable or unwilling to properly answer questions regarding the building works undertaken are all definite red flags.

“Purchasers should approach renovated properties carefully, particularly where works appear recent, extensive or DIY in nature but very little information is disclosed in the contract or vendor statement.”

Adelaide conveyancer Najee Al-Sarawi, from Four Points Conveyancing, said that while conveyancers do not certify building compliance, they should identify potential concerns, raise appropriate enquiries and recommend further investigation where necessary. 

“Failure to do so may expose practitioners to professional and reputational risk,” Al-Sarawi said.

“For buyers it can mean unexpected rectification costs, council enforcement action, insurance complications and reduced property value. And for sellers it can mean delays, renegotiations, disputes and potential disclosure issues.

“Ultimately, thorough due diligence and early investigation help ensure all parties can proceed with confidence and avoid costly surprises after settlement.”

Al-Sarawi advised conveyancers should be asking several key questions of their sellers:

• What works have been completed;
• When were they undertaken;
• Were approvals obtained;
• Who completed the works;
• Were licensed contractors engaged; and
• Are compliance certificates available.

And, depending on the works undertaken, Al-Sarawi said it’s vital to retain relevant documentation including development and building approvals; final inspection certificates; engineering certifications; plumbing and electrical compliance certificates; owner-builder documentation; relevant warranties and plans.

Susanne Mosely, managing director of Hunter Legal in Maitland, said, in NSW, compliance in property renovations is “crucial”.  

“Without ensuring the necessary permits and certifications, parties can hit major complications, penalties and financial loss when selling or buying property,” she said. 

Mosely added the implications of overlooking owner-builder renovations and relevant compliance could seriously affect all parties.

“Compliance in any property renovations is crucial to ensure safety and legal adherence,” she said. 

“Without ensuring the necessary permits and certifications, parties can hit major complications, penalties and financial losses when selling or buying property. 

Mosely said, for a vendor, there could be claims for misrepresentation pursued by a purchaser, contractual disputes, failed transactions resulting in claims for damages, compensation or even misleading and deceptive conduct allegations under Australian Consumer Law.

“For a purchaser, if the transaction completes before issues are known, they could face council enforcement action for unapproved or illegal renovations, significant rectification costs, insurance coverage issues and potentially reduced property values,” she said.

“Most importantly, though, for the conveyancer, issues of professional negligence could arise if all due diligence enquiries are not made and advice, in these regards, is not provided. 

“If a conveyancer does not thoroughly investigate indicators of works undertaken at a property or to properly advise their clients – either a buyer or seller – a negligence allegation resulting from their clients loss may follow.”