26 September 2023

Modern houses complete with incompetence

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Reported by investigative reporter Katri Uibu homeowners are still left to deal with riddled with problems.

In short: Property buyers are told to do their due diligence, but even the most careful can end up with a home that’s riddled with problems.

What’s next? Building inspectors want the industry regulated and those undertaking pre-purchase inspections to be licensed.

The designer house wrapped in greenery was so “exquisite” Faye* made a $1.7-million verbal offer on it, noting it was “like an executive residence,” she said.

In a process that defies logic among buyers in Tasmania, in most cases they have to make an offer on a property before they can have it inspected for potential defects, which — if major — would release them from the contract.

Faye’s probing of the real estate agent revealed another buyer had pulled out of the sale after receiving an inspection report for the house.

“He made a very big point of saying that this inspector was a very alarmist building inspector. He liked to make mountains out of molehills, and he even called him a chest beater,” she said.

Faye said the agent told her the inspection report had identified some moisture underneath the floorboards.

“And then, he physically jumped up and down on the floorboards to say, ‘See, I haven’t fallen through the boards, everything’s fine,’” she said.

Faye put in a $1.7-million verbal offer on a house in Tasmania.

She managed to get hold of the inspector, who said he had called the agent after inspecting the house for the previous buyer, to say: “You’re not going to like what I’m going to tell you, but this house has some major problems.”

His inspection found some of the structural timbers had “completely rotted out”.

That was listed as a major defect — “a defect of sufficient magnitude where rectification has to be carried out in order to avoid unsafe conditions, loss of utility or further deterioration of the property”.

Faye confronted the agent.

“I said, ‘It’s unconscionable that you were aware of the full extent of these repairs, and you didn’t notify me. You didn’t tell me,’” she said.

“To be buying a house at top dollar, that’s not much change out of $2 million, to know then you have hundreds of thousands of dollars of repairs — ongoing repairs — that the agent is fully aware of, and has chosen to deliberately not disclose, is completely unconscionable.”

The building inspection report shows floor is rotting under a bathroom.

She said although the agent pushed back — saying the inspector “was not well respected” and his report “not worth the paper it was written on” — he agreed to look into whether the issues listed in the report could be addressed.

The building inspector, who had worked in the construction industry for 40 years, had argued that due to the complex design of the house, only an experienced builder would be able to remedy the problems.

Faye said to her disbelief, the real estate agent suggested a handyman could take it on, under the auspices of a builder.

The building inspection report shows some structural timbers have “completely rotted out”. T h e schedule of remedial works showed that while some of the rotting timbers had been replaced, other sections had been repaired.

Coming from Sydney, Faye knew vendors in Tasmania had no legal obligation to disclose issues with properties.

“But I wasn’t prepared for the lack of ethics that real estate agents were employing to sell properties,” she said.

“I just think there needs to be accountability.”

The agency Faye engaged said Tasmania’s real estate market operated on a “buyer beware” basis.

“For this reason, sale contracts are often conditional on satisfactory building inspection reports being obtained by the purchaser and such reports are widely recommended within the industry,” it said.

The agency denied any allegation of wrongdoing and said property representatives took their “legal and ethical obligations extremely seriously”.

It said Faye had been informed that a previous buyer had pulled out of the contract and the defects identified in the report were pointed out to her.

The agency said Faye was told who the building inspector was and when she received the report from him she chose not to make a formal offer on the house.

After sleeping in cars, on and off, for 17 years, Janet was finally able to buy her dream home in Tasmania.

It was only after the sale that Janet found out she was stuck with a property where two-thirds of the buildings were illegal.

“All my enthusiasm for that property has gone down the gurgler, I’m afraid,” she said.

The vendor had signed a property disclosure statement, stating there were no missing permits for additions, alterations, or buildings.

Janet did not engage a building inspector but checked with the local council before the $700,000 sale.

The council told her one of the sheds “appeared” illegal. Her options included demolishing the shed or engaging a surveyor to see if the structure could be made compliant.

“I was quite happy with that — not realising that there were going to be issues with some of the other buildings on the property,” she said.

Janet said she did her due diligence before buying the property

Weeks after buying the property, she received a letter from the council advising her that four of the builds did not have permits.

It was her initial visit — to do due diligence — that prompted the council to open an investigation into the property.

“I was acting in good faith, and then I get this bombshell,” she said.

The mayor of the local council told the ABC she had been initially warned “there were possibly other structures on the property that were also illegal”, but Janet disagrees.

“If they’d said to me, in a few months’ time, we’re going to send you a letter on four out of the six buildings on that property, what idiot would sign a contract?” she said.

The agent who sold Janet the property said: “I told her to do her due diligence and make sure she’s happy before signing a contract. I’m sorry this has happened to her.”

Janet found out after the sale two-thirds of the builds on her new property were illegal

A ‘five-star’ inspection report

The house Jade* bought for about $700,000 has already cost her another $400,000.

She didn’t blindly buy her forever home in Tasmania.

“We wanted to get a building inspection done, just to make sure we were doing our due diligence, and the real estate agent suggested someone we could use for that,” she said.

“The pre-purchase inspection report came back as five-star. It gave the house a 99-per-cent rating.

“We had no reason to question that because the house was only six years old or so.”

The spacious home with stunning views — and a stellar rating — had sold itself.

“[The real estate agent] and the owner were very pleased and put a post on social media about it being a record-breaking sale. Just sort of congratulating themselves on the hard work that they’d done,” Jade said.

“There doesn’t seem to be any standard that they have to follow, and there should be some accountability if they’ve missed things that are really obvious to an expert.

“Why is it we can’t question that and say — you need to be held accountable?”

The agency has not responded and the building inspector declined to comment.

‘I’ve had ongoing suspicions’

Building inspectors are paid to advise buyers of any defects with the houses they aim to purchase.

But forensic engineer Michael O’Halloran said he regularly dealt with distressed clients who had been recipients of “superficial” reports that missed vital — and sometimes obvious — faults.

“They’ve probably mortgaged to their limit, they haven’t got anything to play with, they can’t afford to get anything fixed,” he said.

Consumer Affairs Minister Elise Archer said it was important buyers had access to “all information regarding a property”, which could be obtained from the local council or a building inspector.

Ms Archer said it was important buyers had access to “all information regarding a property” before purchasing.

She said Consumer Building and Occupational Services (CBOS) said a building inspection should be obtained from a practitioner with “appropriate skills and competencies”, but did not stipulate exactly what those skills were.

It confirmed building inspectors did not require a licence, and recommended that consumers themselves assess the inspector’s competence.

“CBOS strongly recommends that consumers seek confirmation of a building inspector’s experience, qualification and insurance status in order to assess the competence and suitability of that person to perform an inspection,” a spokesperson said.

Since June 2020, CBOS has received two pre-purchase inspection complaints relating to an alleged failure to identify defects before a sale.

“Home owners with concerns or complaints in relation to the conduct of a property agent or real estate agent, including any potential breaches of the Property Agents and Land Transactions Act 2016 or the Code of Conduct made under the Act, are encouraged to contact the Property Agents Board of Tasmania, as they are the body responsible for investigating and determining such complaints.”

The Real Estate Institute of Tasmania declined to comment.

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