Unauthorised Alterations - The Registration Trap That Can Void Your Insurance

Property owners in shared-ownership or sectional title developments frequently make improvements to enhance comfort and market value. Common enhancements include security systems, upgraded finishes and fixtures, air conditioning installations, garage conversions, outdoor entertainment areas, gazebos, swimming pools, and carports.

While these improvements can significantly enhance quality of life and property value, many owners unknowingly create serious legal and insurance problems by failing to follow proper procedures.

The Approval Process Many Ignore

What owners often fail to realise is that all structural additions and extensions require a specific approval sequence before, during, and after construction. Skipping any step in this process can result in uninsurable structures, difficulties selling the property, and potential legal action from the owners' association.

The required sequence is:

Step 1: Submit proposed building plans to the property oversight committee for approval

Step 2: Obtain municipal approval and building permits

Step 3: Ensure construction adheres to approved plans (no deviations)

Step 4: Engage a land surveyor to draft an amended property plan for surveyor-general approval

This final step is crucial and frequently overlooked. Even when owners obtain all the necessary approvals before construction and build exactly according to approved plans, the work remains technically "unofficial" until the property plan has been amended and approved by the surveyor-general.

When Deviations Surface, Plan deviations typically emerge at the most inconvenient times:

During Policy Renewal: Oversight committees review updated valuation reports and notice discrepancies between documented floor areas and actual measurements for individual units.

At Claim Time: When filing an insurance claim, the insurer discovers that the damaged structure doesn't match the registered property plan, potentially leading to claim denial.

During Property Sale: Conveyancing attorneys discover that the unit's actual configuration doesn't match the registered sectional plan, potentially derailing the transaction or requiring costly corrections before transfer can proceed.

These inconsistencies usually stem from one of two scenarios:

• Owners failing to obtain any approval before construction

• Owners obtaining approvals but never completing the final plan amendment process

The Critical Role of Official Plans

Valuation assessments must encompass all areas and assets for which the shared-ownership

/ sectional title entity is responsible. Professional valuers must reference the most recent approved property plan to:

• Identify common property areas accurately

• Provide correct breakdowns of registered unit sizes

• Ensure all structures are properly documented and insured

Non-registered extensions become evident when community members discover that unit sizes indicated in valuation reports don't match their expectations or when structures appear that aren't shown on official plans. Such discoveries must be referred to insurance representatives immediately for guidance on rectification.

The Insurance Implications

The insurance consequences of unauthorised or unregistered alterations can be severe:

Uninsurable Structures: Insurance providers may classify non-registered extensions as unauthorised and subsequently uninsurable. This means that if your expensive new entertainment area, pool, or garage conversion is damaged or destroyed, you may receive no insurance payout whatsoever.

Voided Cover: In some cases, unauthorised alterations can affect insurance cover for the entire unit, not just the altered portion. This puts your entire investment at risk.

Mandatory Plan Updates: Insurers may require property plan updates before granting or continuing cover for extensions. This can be costly and time-consuming, involving surveyor fees, surveyor-general fees, and potential legal costs.

Discovery Timing: These issues are far better discovered during policy renewal than when filing claims. A claim denial due to unregistered structures can be financially devastating, leaving owners to bear the full cost of repairs or replacement.

Benefits Beyond Insurance

Updated valuations and current property plans provide benefits beyond insurance cover:

Accurate Levy Calculations: Owners pay assessments proportionate to their registered unit sizes. Unregistered extensions mean some owners may be paying less than their fair share while others subsidise them.

Safety Hazard Identification: Professional inspections accompanying valuations can uncover unauthorised structures that pose safety risks—faulty electrical work, structural concerns, or fire hazards.

Maintenance Planning: Knowing exactly what structures exist and who is responsible for them enables proper preventative maintenance planning and budgeting.

Property Transactions: Clean, up-to-date property plans facilitate smooth sales transactions without delays or complications during conveyancing.

Legal Compliance: Ensuring all structures comply with building regulations and property scheme rules protects both individual owners and the community from potential legal action or municipal enforcement.

The Consequences of Non-Compliance

Beyond insurance issues, unauthorised alterations can result in:

• Orders to remove or modify structures at the owner's expense

• Fines from municipal authorities for unpermitted construction

• Legal action from the owners' association

• Difficulty obtaining financing, as banks may refuse mortgages on properties with unregistered alterations

• Reduced property values due to unauthorised structures

• Strained relationships with neighbors and oversight committees

• Personal liability if unauthorised structures cause damage to common property or adjacent units

The Right Way Forward

For owners who have already completed alterations without following proper procedures, the solution is straightforward but requires action:

1. Engage with the oversight committee immediately to disclose the alterations

2. Consult with a professional to determine what approvals are required retrospectively

3. Work with a land surveyor to prepare amended plans

4. Submit plans through the proper approval channels

5. Complete the surveyor-general registration process

6. Update insurance cover once plans are officially amended

For owners planning future improvements, following the four-step process from the outset will save considerable time, money, and stress.

Collective Responsibility

Oversight committees also bear responsibility for monitoring compliance. Regular property inspections, reviewing valuation reports carefully, and maintaining open communication with owners can help identify issues early.

When unauthorised structures are discovered, committees should:

• Address the matter promptly but fairly

• Work with owners to find solutions rather than immediately resorting to punitive measures

• Ensure consistent enforcement of rules across all units

• Educate all owners about proper procedures to prevent future violations

Maintaining current, accurate property plans benefits everyone in a shared-ownership/ sectional title community. While the approval and registration process may seem bureaucratic and time-consuming, it serves essential purposes: ensuring adequate insurance cover, maintaining fair assessment allocation, promoting safety, and protecting property values.

The inconvenience of following proper procedures is minimal compared to the potential consequences of shortcuts. Whether you're planning improvements or have already completed them without proper approvals, taking the right steps now will protect your investment and provide peace of mind for years to come.

Don't let the registration trap catch you unprepared. When it comes to property alterations in shared-ownership/sectional title developments, doing things right the first time is always easier—and far less expensive—than trying to fix problems after the fact.