If you are purchasing a property that has unconsented building works, it is very important to consider the consequences and obtain legal advice before signing the agreement. It may seem like a minor alteration to the property (such as an unconsented unit in the garage), however there are a number of factors you will need to consider.
It can be difficult to obtain finance and insurance for a property that has unconsented building works and you are required to disclose any unconsented works to your bank and insurance provider. For example, if you did not disclose this to your insurance provider and made an insurance claim in the future and you were found to have withheld this information then there is a risk your claim could be declined.
If there are land covenants registered on the title which prevent the building works you could be in breach. A land covenant is enforceable by the parties to the land covenant (usually neighbouring landowners), for example if a neighbour questioned the existence of a converted unit you could be forced to remedy the breach.
There is no assurance that the building work meets the building code and if the Council became aware of the work, you could be served with a Notice to Fix requiring you to remedy the breach which could be expensive.
If you sell the property in the future, you would need to disclose the unconsented works to any potential buyers.
Before you sign any offer on a property you should have your solicitor look it over for you and ensure it includes a due diligence condition which allows you to pull out of the agreement if you are not satisfied with the outcome of a due diligence investigation (which includes being able to obtain finance, insurance and checking the land covenants registered on the title).