Property sold and settled correctly

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Heth

Active Member
29 June 2018
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1
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What happens when a Property has been sold and the settlement hasn't taken care of outstanding bills?
Two of these bills for which half payment is owed, are to the town planner and the builder who worked to legitimise the illegal balustrade and sign off some building works. The sale was a deceased estate with other owner from Canada. She promptly paid her half of the invoices.
Thus the Building Information Certificate was achieved and the building could be sold with confidence and a good price. The Real Estate Agent more or less told me that the Invoice payment was lost with not being accounted for in the settlement and has passed blame onto the other owner who would have needed to pay for them in the settlement. Hope someone can help with this matter. Thanks.
 

Rob Legat - SBPL

Lawyer
LawTap Verified
16 February 2017
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2,894
Gold Coast, Queensland
lawtap.com
You haven’t mentioned what state you’re in, which could possibly make a difference as each state has their own real property laws and ‘standard’ contract conditions.

Despite this, I can answer in general terms from a Queensland perspective. These debts don’t appear to be the type that would be considered to ‘run with the property’. Some debts, notably land tax, attach to the property and become the new owner’s problem if they aren’t dealt with in completion of the contract.

It appears here that these will be run if the mill contractual debts - which means that the person(s) who entered into the contract for the services remain liable. The town planner and builder will have to chase payment from them.

The builder, especially, may try to assert they have a right to chase payment from the new owner or to remove the work; and may even mention the words ‘Romalpa clause’, which has zero effect under current law. At absolute best the builder may have a security agreement asserting security rights in the materials used. This won’t work either. Once the materials are used in building they become part of the house and short of having taken out a mortgage (which has about zero chance of having happened), the security in the materials is gone. In simplified terms the builder can trace their security then to the proceeds of the materials which forms part of the sale proceeds of the property. In practical terms that just means being able to obtain payment, the security would be effectively gone.