"The house has been renovated. Does that mean the renovation was approved?"

Priya views a corner terrace house with an extended kitchen, an additional upstairs room and a covered side area.

The renovation is one of the main reasons she agrees to pay a higher price.

The seller tells her:

“The extension has been here for years. No one has ever complained.”

Priya assumes that because the structure is permanent and the local authority has never removed it, the renovation must have been approved.

After signing the SPA, her bank’s valuer raises questions about the extension. Priya then discovers that the seller cannot produce approved plans.

A structure may have existed for many years without proving that all necessary approvals were obtained.

1. Ownership of the land does not mean unrestricted freedom to build

A registered proprietor has rights over the property, but those rights remain subject to land conditions, planning controls, building laws and other applicable requirements.

Depending on the nature and location of the works, approval may be required from:-

• the local authority;

• the planning authority;

• the developer;

• the Joint Management Body or Management Corporation;

• the State Authority;

• the purchaser’s or owner’s financier; or

• another relevant agency.

Different approvals serve different purposes.

Management approval for renovation works does not necessarily mean the local authority approved the structural plans. Similarly, payment of assessment tax does not legalise an unauthorised extension.

2. What documents should the purchaser request?

Depending on the works, relevant documents may include:-

• approved building plans;

• planning permission;

• renovation permits;

• structural drawings;

• architect or engineer certifications;

• local-authority correspondence;

• management approval;

• contractor documents;

• deposit-refund records; and

• completion or compliance documents.

The absence of one document does not automatically establish that the entire house is unlawful. However, the seller should explain what work was done and what approvals were obtained.

A purchaser should not rely solely on the seller’s statement that the previous contractor “handled everything”.

3. A title search will not provide the full answer

The land title may show the owner, tenure, land use, express conditions, restrictions, charges and caveats.

It will not ordinarily list every wall, roof, room or kitchen extension constructed on the land.

That is why a clean title does not confirm that the physical building complies with all approved plans.

The purchaser may need to compare:-

• the property on the ground;

• the approved layout or building plan;

• the parcel or accessory-parcel plan; and

• the title and land conditions.

If there is a material inconsistency, technical and legal advice may be required.

4. Why does approval matter to the purchaser?

An unauthorised renovation may lead to practical and legal consequences.

The relevant authority or management body may require the owner to submit plans, carry out corrective work, pay charges or restore the property, subject to the applicable law and facts.

The purchaser may also face:-

• difficulty obtaining financing;

• a lower valuation;

• insurance or takaful issues;

• disputes with neighbours;

• water-leakage or structural problems;

• management enforcement;

• additional compliance costs; and

• difficulty during resale.

The purchaser becomes the person dealing with these problems after completion even if the seller carried out the work years earlier.

5. The bank’s valuation does not approve the renovation

A valuer assesses the property for the financier’s purposes. A valuation report is not a building permit.

The bank may exclude an unauthorised extension from the accepted value or impose further requirements. Another bank may take a different view.

Even where the loan is approved, that does not mean the local authority, management body or insurer has confirmed the renovation’s legality.

Credit approval and regulatory approval are separate matters.

6. Strata properties require another layer of examination

For a condominium, apartment or strata landed development, the owner is also bound by the strata-management framework and applicable by-laws.

Renovation affecting the structure, façade, common property, utilities or appearance may require prior management approval.

Examples include:-

• enclosing a balcony;

• altering windows or external walls;

• installing equipment on common property;

• hacking structural elements;

• rerouting pipes;

• changing floor finishes in a way that affects waterproofing; and

• using a car park or common corridor as private storage.

The fact that other owners have made similar alterations does not establish approval.

The Akta Pengurusan Strata 2013 and subsidiary regulations regulate the management of strata developments and enforcement of applicable by-laws.

7. What if the house is sold on an “as is where is” basis?

A subsale SPA may state that the purchaser accepts the property in its current condition.

That clause can place substantial responsibility on the purchaser to inspect the property before committing.

However, its precise effect depends on the wording and circumstances. It does not necessarily protect a seller who has made a fraudulent or actionable false representation.

If the seller expressly represents that all extensions were approved, that statement should be recorded and supported by documents.

If no approval can be produced, the parties need to decide how the risk will be treated instead of leaving the issue unanswered.

8. Can the seller obtain approval before completion?

The parties may make the transaction conditional upon the seller obtaining the required approval or regularisation.

The SPA should then state:-

• the specific approval required;

• who must apply;

• the application deadline;

• who bears professional fees and penalties;

• whether alteration or demolition is acceptable;

• what happens if approval is refused;

• whether the purchaser may proceed at a revised price; and

• how the deposit will be treated if the SPA is terminated.

An open-ended promise that the seller will “try to settle it” does not provide a clear completion mechanism.

Regularisation is not guaranteed. The authority may require modifications or removal instead of approving the structure in its current form.

9. What if the purchaser is willing to accept the risk?

The purchaser may still decide that the property is commercially worthwhile.

That decision should be made with an estimate of:-

• the cost of obtaining plans;

• professional and authority fees;

• possible penalties;

• corrective construction;

• loss of floor area if removal is required;

• financing impact; and

• future resale difficulty.

The SPA should record the agreed allocation of responsibility.

A purchaser who knowingly accepts the property without approval may have limited grounds to complain later about a risk that was expressly disclosed and accepted.

10. Inspect before valuing the renovation as part of the price

A larger kitchen or additional room can make a house more attractive.

But additional floor area should not automatically be treated as additional lawful value.

Before paying a premium, ask the seller for the approved plans and compare them with the building. If the difference is substantial, obtain advice from the appropriate architect, engineer, surveyor or local-authority consultant.

The renovation may be physically attached to the house.

That does not mean its approval is attached to the title.