By Jonathan Tisher

24 March 2015

As a general rule, the bigger the apartment, the more the apartment can be sold for. This leads to greater profitability for a developer.

There is currently a major inconsistency in the property industry in respect to determining the size of an apartment. There are two major documents which deal with representing apartment size. They are architectural drawings (usually prepared by town planner and the architect) and the plan of subdivision (prepared by the surveyor). Theoretically, the documentation should be consistent. In practice they are usually not.

The architectural drawings identify the size of the apartment adopted by the Property Council of Australia (“PCA”). Conversely, the plan of subdivision identifies the size of the apartment based on the Subdivision (Registrar’s Requirements) Regulations 2011 (Vic). The PCA guidelines treat the boundaries as being; for the case of shared walls, the centreline of those walls and for external walls, to the external finished surface of the dominant purpose of such walls. In circumstances, where the plan of subdivision defines the boundary of the interior walls by reference to the interior face on the plan of subdivision (which is the more commonly used method for multi-level developments), there will be an inherent inconsistency.

The physical usable space for a Purchaser may not differ depending on which method is used, however the actual size of the lot purchased will differ. In most cases, the Purchaser will be advised (during the marketing campaign) of the size of their apartment based on the PCA guidelines. However, when they come to settlement and they have the apartment size measured, it will be smaller than anticipated. This in turn may impact on the amount that a mortgagee is prepared to lend to a purchaser and may in certain circumstances give a purchaser a right to terminate a contract.

The difficulty for a Purchaser is that plans of subdivision within a multi-level development will usually not contain measurements so it will be difficult for a Purchaser to determine the size of the premises that they are purchasing based on the plan of subdivision.

It is therefore very important that this issue is considered and discussed with your lawyer prior to preparing a contract to address the potential concern. Failure to properly deal with the issue may give a purchaser a right to avoid the contract.

 

Any further questions, please contact Jonathan Tisher or a member of our Property Law team.

Related Articles

View All
Property & Development / Developments / Real Estate Agents

First Home Owners Guide: What You Need to Know

First Home Owners: there are many things for you to think about – what suburb you want to live in, what type of...
Read More
Property & Development / Real Estate Agents

URGENT LEGAL UPDATE – New Statements of Information just released

Tisher Liner FC Law were consulted by Consumer Affairs Victoria in respect to their review of Statements of...
Read More
Owners Corporation / Owners Corporations & Strata / Property & Development

Looking behind an Owners Corporation’s ‘special resolution’ to authorise legal proceedings

At an interlocutory hearing, the developer asked VCAT to dismiss the Owners Corporations’ proceedings on the basis...
Read More
Property & Development / Developments

Sale of Land Amendment Act: What You Need To Know

The Act implements key outcomes of the Consumer Property Law Review’s examination of the Sale of Land Act 1962 (Vic)...
Read More
Property & Development / Developments

The Sun Sets on Developer Rights

The new Sunset Provisions will give greater power to purchasers in off-the-plans contracts The amendments will...
Read More
Business Law / Property & Development / Developments

TLFC Law Triple Finalists in the Lawyers Weekly Australian Law Awards 2019

Celebrating its 19th year, the Australian Law Awards, in partnership with UNSW Law, is the pinnacle of award programs...
Read More
Construction / Property & Development / Construction

What Developers should look for in a Vendor Statement

The Vendor Statement in particular is often the starting point for a developer’s due diligence enquiries and it is...
Read More
Property & Development / Developments

Developers Beware: Stamp Duty Soon to be Payable on Development Agreements

Developers need to be aware of this Act as stamp duty will now, in most cases, be payable on what has been...
Read More
Commercial Contracts & Agreements / Leasing & Lease Disputes / Property & Development

Could you Be Contaminated?

Whether you are the purchaser of land, the seller, a landlord, a tenant, a developer or a lender, there are obligations...
Read More
Information Technology & Innovation / Developments / Business Law

Cyber Security and Protection from Cyber Fraud

Email communication is an inherent part of modern day business It is not uncommon to run an entire transaction online,...
Read More
Property & Development / Developments

Co-ownership of property, what could go wrong?

This can be a very exciting time and you can easily get caught up in the celebrations of settlement without a second...
Read More
Business Law / Property & Development / International Investors

Self Managed Superannuation Funds and Property Investment Part 2: Stamp Duty when Transferring Property Assets

Whether the SMSF has purchased this property outright or though the assistance of a Limited Recourse Borrowing...
Read More