At Absolut Legal, we are self proclaimed experts in Property Law, and in most situations, property transactions proceed without any issues. However, every now and then we encounter a unique or complex situation. Today, we take a closer look at one of those situations in particular the ramifications of changing your home once you have an offer on the table.
The Situation
Here’s what happened:
- Party A (Purchaser) and Party B (Vendor) entered into a contract for the sale and purchase of a residential property.
- During the due diligence period the purchaser discovered that one of the rooms in the home did not hold consent and notified the vendor
- Upon learning of this, the vendor (Party B), without consulting the purchaser, opted to remove the unconsented room entirely—essentially renovating the property to ensure it complied with the Building Act requirements.
The Question
Can a vendor renovate or alter their own property after an agreement to sell their property is signed, without consulting the purchaser?
The Legal Perspective
At Absolut Legal, when we're faced with this type of situation, the first and most crucial question we ask is:
What did the purchaser agree to buy?
To answer this question we looked at the description of the home and the photos along with asking the purchaser if there was any mention of this work at the time they purchased. Ultimately it was determined the purchaser had no knowledge of this and there was no mention in the property advertisement and the photos depicted this room.
With this answer we know that if a vendor makes a material change that significantly changes what is being bought, such as removing an entire room, then it could be argued that the property is no longer what was originally agreed upon.
Was the Renovation Justified?
Playing the other side of this card we then looked as to whether or not this work was justified.
In this case, the vendor’s intention was likely to make the home compliant, but by doing so without consultation of the purchaser it is our opinion they have overstepped and were contractually obligated to consult with the purchaser. The duty to consult results from an equitable right in the property the purchaser has by signing this agreement. Ultimately even if the goal was to ensure the property met the building act requirement and was compliant, the result was a property materially different from what the purchaser had agreed to buy and had they been aware of the change they may not have purchased at the given price.
What rights does a purchaser have?
Depending on the specifics, the purchaser may have grounds to:
Cancel the contract,
Renegotiate the price
Seek compensation
Key Takeaway
When an agreement to sell has been signed, changes to the property in anyway without consent of the purchaser could have ramifications for your sale leading to potential costly consequences.
At Absolut Legal, we navigate these situations with clarity and precision, ensuring our clients understand their rights and the best path forward.
If you're facing a tricky property issue or simply want expert guidance during your sale or purchase, our team is here to help.
