Building Permit Puzzlement

Since my last update we’ve hit a speed bump, and I’m wondering if anyone else has gone through the same and can enlighten us.

For background, our block is under a covenant that says 75% of external walls (other than windows) must be ‘constructed of brick, brick veneer, stone or like material’. All parties have been aware of this covenant since before the whole process started. Our house is to be built from Hebel, which to quote the manufacturer is ‘autoclaved aerated concrete (AAC)’. In our thinking, this would happily fall into the ‘like material’ box.

We are currently waiting on Arden to arrange the building permit through their building surveyor. Shortly after my last update we received an email with an attached letter for us to sign. The key part of the letter read:

“We, XYZ, hereby instruct and take full responsibility for Arden homes Pty Ltd to construct our proposed dwelling from material/s other than that stipulated in the covenant on title as referenced above.”

To our thinking, Hebel is a ‘like material’ and doesn’t contravene the covenant, so we’re not keen to sign something that says our house will be in breach of the covenant. However, we also understand that Arden wants to cover itself, so we emailed back explaining our concern and proposed the following amended wording:

“We, XYZ, hereby instruct and take full responsibility for Arden Homes Pty Ltd to construct our proposed dwelling from the materials detailed in the contract notwithstanding the covenant on title as referenced above.”

We expected that to satisfy everyone, as it makes clear that we are aware of the terms of the Covenant and instruct Arden to proceed without outright saying we’re breaching it. Unfortunately, what they sent back instead was a Deed of Release and Indemnity which:

a.Explicitly says that the building is constructed of materials not as required by the covenant;

b.Requires us to tell prospective purchasers that the building doesn’t comply with the covenant If we sell the property within ten years; and

c.Releases and indemnifies Arden against any future claims arising out of any breach of the Covenant.

We can live with C; we don’t think it is in breach of the Covenant, so we’re not terribly worried about indemnifying Arden.

A and B are more worrying; we don’t want to stick our necks out by saying we’re in breach of the Covenant, and we don’t want to have to tell potential purchasers that it is. Any purchaser will see the Covenant and can make their own assessment.

They’ve basically told us there will be no building permit unless we sign. So, my queries are as follows:

1.Has anyone else had a similar experience, and what was the outcome?

2.Surely if this was going to be an issue the builder should have raised it before signing us up to the Contract and taking our deposit?

3.Is the builder actually entitled to insist on our signing and hold up the start of the build until we do?
We can’t see how. It is the builder’s responsibility to get the building permit. Either the house complies, in which case the building surveyor can issue the permit, or it doesn’t, in which case the building surveyor can’t. We can’t see that the Deed of Release and Indemnity changes the compliance of the building in any way. If that is correct, then the builder’s obligation under the Contract is surely to obtain the building permit and get on with the job?

Any thoughts/previous experience anyone has had would be gratefully accepted at this point…

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