Short Story Series: The Contract Clause That Should Raise Immediate Red Flags

Karunn Shahani

Principal Lawyer and Managing Director

A Buyer Sees the Clause and Thinks Nothing of It

A buyer signs a contract with a clause saying they can't apply for a building certificate before settlement.

They think nothing of it.

Their conveyancer tells them, "nobody gets a building certificate anyway".

But it's actually a massive problem.

What Is a Building Certificate?

Building certificates are issued by council and confirm that council won't issue orders to alter, repair, or demolish a structure for 7 years from the date of issue.

For a buyer purchasing a property with a granny flat, a garage conversion, or any unapproved works, they're critical.

Why Would a Vendor Want to Restrict You From Getting One?

Because the Conveyancing (Sale of Land) Regulation implies statutory warranties into every contract.

One of those warranties is that no matter exists that would justify an upgrading or demolition order against buildings on the land.

A building certificate can expose exactly that kind of problem before you're locked in.

Why This Clause Is a Red Flag

Restricting access to a building certificate is an attempt to limit what you find out before settlement.

It doesn't override the statutory warranties, but it attempts to limit your access to them.

That's a massive red flag.

Why Acting Early Matters

Acting in time might mean:

  • Renegotiating the purchase price

  • Requiring rectification works

  • Walking away before you're stuck with a lemon

Once you've settled, you own the problem.

And the cost of fixing it.

Don't Accept It as Standard

If you see a clause like this in a contract, push back on it.

Don't accept it as standard.

It isn't.

Get the Contract Reviewed Before You Exchange

Get a property law specialist to review your contract before you exchange.

The cost is small.

The risk of not doing it isn't.

Property Law

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