Building Certificate Explained for Property Buyers
A building certificate is an approval issued by a local council in NSW that confirms a building or structure complies with relevant standards and limits council's ability to take enforcement action against it for a set period.
What Does Building Certificate Mean?
A building certificate is a formal document issued by a local council in NSW under the Environmental Planning and Assessment Act. When a council grants a building certificate for a structure, it is confirming that the building meets relevant standards as they stand at the time of inspection — and that the council will not take action to have the structure demolished or altered for a period of seven years from the date of issue.
Buyers most often encounter building certificates when purchasing properties where unapproved or potentially non-compliant structures exist. These might include garages, carports, granny flats, sheds, decks, or additions that were built without a development application or that deviated from the original approved plans. A building certificate effectively regularises the structure in the eyes of the council for the purposes of enforcement.
The practical implication is that a building certificate does not mean a structure is fully approved or that it would comply with current standards if built today. It means the council has assessed it and will not pursue enforcement action during the protection window. Buyers need to understand this distinction carefully, because a building certificate is not the same as a construction certificate or occupation certificate.
Why This Matters for Buyers
Unapproved structures are more common than many buyers expect, particularly in older suburbs and regional areas where informal building additions have been made over decades. If a property has a garage, pergola, deck, shed, or secondary building that was added without council approval, a buyer who purchases the property takes on any outstanding compliance risk associated with it.
A building certificate shifts some of that risk. If a vendor has obtained one for the relevant structure before settlement, the buyer knows the council has inspected it and will not pursue enforcement for seven years. Without a building certificate, the council retains the right to issue an order requiring demolition or rectification of a non-compliant structure — and that obligation passes to the new owner once the property is transferred.
Beyond enforcement risk, unapproved structures can also affect insurance coverage, lending decisions, and future renovation approvals. Some lenders will not include a non-compliant structure in their valuation, and insurers may exclude structures built without council approval from the policy. These are real financial consequences that flow directly from an unresolved approval question.
In a purchase negotiation, the existence of unapproved structures — and whether a building certificate has been or will be obtained — is a legitimate point to raise. Buyers can ask vendors to obtain a building certificate prior to exchange, factor the cost of regularisation into their offer, or seek a price reduction that reflects the outstanding risk.
Common Mistakes Buyers Make
The most common problem is buyers not realising that unapproved structures exist at all — or assuming that because the structure is visible and has been there for years, it must be fine. Council records and your building inspector's report are the places to check, not the selling agent.
- Assuming a building certificate means full council approval — A building certificate is not the same as a DA approval or occupation certificate. It confirms non-enforcement for seven years, not that the structure was legally approved when built.
- Not checking whether structures match council records — Your solicitor or conveyancer can obtain a 10.7 certificate and building records to compare what council has approved against what exists on site. Discrepancies reveal where the risks are.
- Relying on the vendor's word — A vendor who says "council knows about the garage" is not providing evidence of approval. Ask for documentation, not assurances.
- Underestimating the cost of unapproved structures — Obtaining a building certificate involves a council inspection and fee. If the structure fails the inspection, rectification costs can be significant. Buyers who have not priced this risk may end up well out of pocket.
- Not raising it in the negotiation — Unapproved structures are a genuine compliance risk. Many buyers discover them after exchange and have limited options. Raising the issue before exchange gives you negotiating room and time to decide whether the risk is acceptable.
How This Shows Up in the Illawarra
Across the Illawarra — Wollongong, Shellharbour, Kiama, and surrounding areas — older housing stock from the 1960s through to the 1990s frequently has informal additions that were never formally approved. Garages converted to bedrooms, covered patios added at the back, garden sheds built close to boundaries, and detached studios are all common examples. In many cases these additions have been there for twenty or thirty years, but that does not confer any legal status.
The coastal and escarpment geography of the region also creates situations where structures may not comply with current setback rules, bushfire attack level requirements, or flood controls — even if they predated those rules. A building certificate assessed under current standards may not always be straightforward to obtain for a structure in one of these areas, and buyers should factor that possibility into their due diligence if the property is in a known bushfire zone, flood risk area, or has slope constraints.
Granny flats and secondary dwellings are particularly relevant to Illawarra buyers. Given the region's strong rental demand, many older homes have been adapted informally to accommodate a secondary living space. Buyers who want to rent out or formalise that space need to understand whether it has complying development certificate approval, a full DA, or neither — and whether a building certificate has been issued. A building certificate on a granny flat does not give the owner the right to rent it out as a separate dwelling if the use itself was not approved.
Practical Takeaway
Before you exchange on any property that has structures beyond the main dwelling — a garage, a granny flat, a shed, a deck, a carport, a pergola — ask your solicitor or conveyancer to check council records and confirm whether those structures are approved. If they are not, find out whether a building certificate exists or whether one has been applied for. If neither is in place, you are taking on an open-ended compliance risk.
Where a vendor has not obtained a building certificate and you still want to proceed, you have a few options: you can request the vendor obtain one before exchange, negotiate a price reduction to reflect the cost and risk, or obtain legal advice on the specific exposure. In some cases, particularly where the structure is clearly non-compliant and rectification would be expensive, it may be appropriate to walk away entirely.
The key point is to surface the issue before exchange, not after. Once the property is in your name, council enforcement notices are addressed to you — not the previous owner.
Frequently Asked Questions
What exactly does a building certificate protect against?
A building certificate prevents the council from taking enforcement action — such as issuing a demolition order or order to alter — against the structure for a period of seven years from the date of issue. It does not prevent action related to safety hazards or structures that pose a risk to health.
When does a building certificate come up in the buying process?
Usually during the contract review stage when your solicitor or conveyancer identifies unapproved structures through council records, or during a building inspection when the inspector notes structures that appear to lack approval. It can also appear in the vendor's disclosure documents if the vendor has already obtained one.
Is a building certificate the same as an occupation certificate?
No. An occupation certificate is issued when a new building or alteration is completed and meets the terms of the development consent — it confirms the building is approved for occupation. A building certificate is retrospective and applies to existing structures, including those built without proper approval. They serve different purposes.
Can a building certificate be refused?
Yes. Council may refuse a building certificate if the structure does not meet certain standards or if it poses an unreasonable risk. If the inspection reveals significant non-compliance, the council may decline to issue one and instead issue an order requiring rectification. This is a risk buyers should be aware of when a vendor agrees to obtain a certificate pre-exchange.
Does a building certificate mean I can use the structure however I want?
No. A building certificate addresses the structural and standards compliance of the building — it does not confer any land use approval. A granny flat with a building certificate is still not approved for use as a separate rental dwelling if the use was never approved. Buyers need to check both the structure and its permitted use.
Should first home buyers care about building certificates?
Absolutely. First home buyers often focus heavily on price and condition but overlook approval status. If you are buying an older home with any additions beyond the original structure, it is worth checking. Compliance issues discovered after purchase fall entirely on the new owner.
How does this affect the NSW conveyancing process?
Your conveyancer or solicitor will typically check the section 149 or 10.7 certificate and any council records as part of the due diligence process. They should flag any structures visible on the plans or in inspection reports that do not appear in the council's approved records. Raising building certificate questions before exchange is standard practice in NSW conveyancing.
Does using a buyers agent help with this?
Yes. A buyers agent familiar with the local market can identify properties where unapproved structures are likely based on the age of the home, visible additions, and council records. They can also help you factor the compliance risk into your offer, raise the issue in negotiations, and coordinate with your solicitor to ensure the question is resolved before you commit.
If you're unsure whether a property has the right approvals in place, we can help you work through it before you commit. Reach out to The Shoreline Agency and we'll take a look at what you're dealing with.
