Unconsented work and certificates of acceptance in a commercial building: what the records show, and what it costs you
A certificate of acceptance (CoA) is a council's after-the-fact acceptance of building work that needed a building consent and did not get one. Under the Building Act 2004 the council may issue one only where it is satisfied, insofar as it could ascertain, that the work complies with the Building Code, so a CoA is a partial and retrospective comfort, not a code compliance certificate. For a commercial buyer, an unconsented mezzanine, fit-out, fire-separation change or change of use matters more than an unconsented deck on a house, because it can put the compliance schedule, the means of escape and the building's lawful use in question. The cost of putting it right belongs in the price negotiation.
What a CoA is, and what it is not
The Building Act 2004 requires a building consent before building work is carried out (section 40, with exceptions in section 41), and a code compliance certificate when consented work is finished (sections 91 to 95), which is the council's statement that the work complies with the consent.
Section 96 is the exception route. A council may issue a certificate of acceptance for work already done where a consent was required but not obtained, by the current owner or a predecessor in title, and in two narrower cases. Section 96(2) matters most: the council may issue it only if satisfied, on reasonable grounds, that, insofar as it could ascertain, the work complies with the Code. Work inside a wall or under a slab cannot be ascertained, so a CoA covers what the council could see and test, and no more. It is not equivalent to a code compliance certificate.
Expect an application fee for a CoA; we could not find a published national figure, so ask the council what it charges before you count on one as the fix.
Why unconsented work is a bigger problem in a commercial building
Three provisions of the Act make the same unconsented work costlier in a commercial building than in a house.
The compliance schedule. Any building not used wholly as a single household unit needs a compliance schedule if it has a specified system, such as fire suppression, emergency warning, emergency lighting, lifts, mechanical ventilation or specified means-of-escape features (section 100). An unconsented partition or mezzanine can leave the schedule describing a building that no longer exists. The annual building warrant of fitness (section 108) only certifies that the schedule's inspection, maintenance and reporting procedures were followed for the last 12 months. A current BWOF does not say the building complies with the Code, and it does not clear unconsented work.
Change of use. The owner must give the council written notice before changing the use of a building (sections 114 to 116), and on a change of use the building must comply with the Code as near as reasonably practicable for means of escape, protection of other property, sanitary facilities, structural behaviour and fire-rating performance (section 115). This is the provision that bites when a warehouse has quietly become a gym, a childcare centre or offices.
Premises open to the public. Whoever owns, occupies or controls premises open to the public must not use, or permit the use of, a part affected by building work where a consent was required but not granted, or granted but with no code compliance certificate and no certificate for public use (section 363). For a retail or hospitality building, unconsented work restricts use of the affected part.
How to find it: the file will not tell you
A LIM lists the consents, certificates, notices, orders and requisitions the council itself has issued. The property file holds the consent documents, plans and correspondence behind them. Both only contain what the council knows; Auckland Council says plainly that if work was done without consent it will not be in the property file. So unconsented work is found by comparing the building to the consented drawings, not by reading the file and finding nothing.
Order the property file (Auckland Council charges $154 for a commercial property file, up to 10 working days standard, $121 urgent), pull out the last consented floor plan and fire report for each stage of the building's life, and have the building walked against them. Our note on commercial building inspection cost covers who does that walk; the desk comparison of listing to file comes first and tells the inspector where to look.
An example (invented, for illustration): a 1,200 m² warehouse is listed with a "180 m² office mezzanine". The property file shows one consent, for a 90 m² mezzanine, with a code compliance certificate issued in 2009, and nothing since. Either the listing has doubled the mezzanine or half of it was built without consent. Either way, the question goes to the agent in writing before the due diligence date.
What the sale agreement gives you, and its limits
The standard ADLS/REINZ agreement (now published with The Law Association of New Zealand, TLANZ) contains a vendor warranty that, where the vendor has done works on the property, any consent required by law was obtained, restricted building work after 13 March 2012 was carried out or supervised by a suitably qualified person, and where appropriate a code compliance certificate was issued (clause 7.3(5)). Read the opening words carefully: it covers work the vendor did. Work by a previous owner is outside it.
Timing is the other limit. Claims for compensation under the agreement must be notified on or before the last working day before settlement, and a breach does not defer settlement (clause 10.0). Beyond the contract, the Act's 10-year longstop (section 393(2)) bars civil proceedings about building work brought 10 years or more after the act or omission, so for old unconsented work there may be no one left to claim against.
Using it in the negotiation
Unconsented work carries two costs: regularising it (a CoA application, or a fresh consent where the work amounts to a change of use, plus whatever physical work the council requires first), and the risk that it cannot be regularised at all. Price the physical work from the drawings as you would any construction scope, with a quantity surveyor where the scope is large; see what a quantity surveyor costs. Then the options are the usual three: the vendor regularises before settlement, the price moves, or you walk. The commercial property due diligence checklist shows where this check sits in the conditional period.
On insurance, we could not find a published insurer rule on unconsented work, and policies differ. Disclose what you have found to your broker before settlement and get the answer in writing.
What this doesn't tell you
It does not tell you whether a particular council will issue a CoA for particular work, or what it will charge. Ask the council.
It does not tell you what insurers will do. Ask your broker, in writing.
It does not replace an inspector walking the building against the drawings. A desk comparison cannot see behind the linings.
It is not legal advice on the warranties or your remedies.
FAQ
What is a certificate of acceptance and how much does one cost?
A certificate of acceptance is a council's after-the-fact acceptance of building work done without the consent it needed, issued under section 96 of the Building Act 2004 only where the council is satisfied, insofar as it could ascertain, that the work complies with the Building Code. Councils set their own application fees; we could not find a published national figure.
Can I get a CoA for old work?
Section 96 allows a CoA for unconsented work by the current owner or a predecessor in title, so age alone is not the bar. Whether a council will issue one for specific old work depends on whether it can satisfy itself the work complies, and we could not verify any date-based cut-off, so ask the council.
Will insurance cover a commercial building with unconsented work?
We could not find a published insurer rule, and policies differ. Disclose the unconsented work to your broker before settlement and get the insurer's position in writing.
How do I spot unconsented work from the council property file?
You cannot spot it in the file itself, because the file only holds work the council knows about. Pull the last consented floor plan and fire report from the file and compare them to what is physically in the building; anything built that is not on the drawings needs explaining.
Who pays to fix unconsented work, the buyer or the vendor?
Whoever the negotiation says. Before settlement the buyer can ask the vendor to regularise the work, negotiate a price reduction, or decline to go unconditional; after settlement the cost is the owner's, and claims against the vendor are limited by the agreement's warranties and notice deadline.
Is a missing code compliance certificate the same problem?
Related, but different. A missing code compliance certificate means the work was consented but not certified as complying with that consent, whereas unconsented work was never consented at all. Both leave you without the council's sign-off.
Get the file read against the listing
If you have a listing, an information memorandum or a council property file for a commercial building, send it through and we will tell you in writing what the records show and where the physical check needs to focus. Independent analyst, not a valuer, engineer, surveyor, building inspector or lawyer.
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