NSW homebuyers have been warned to avoid future insurance problems when purchasing high rise apartments by demanding an occupation certificate from the vendor.

According to lawyer Mark Byers of Hunt & Hunt, purchasers who fail to obtain an occupation certificate “could be exposing themselves to considerable insurance risks”.

He said purchasers without certificates could find that their insurance policies don’t cover them in the event of the building being destroyed by fire or some other catastrophe.

“Without the occupation certificate, a purchaser – and ultimately a purchaser’s insurer – has no guarantee that the dwelling is structurally sound and provides the minimum levels of health, safety and amenity,” Mr Byers said.

He said many buyers and vendors are unaware of section 109M (1) of the NSW Environmental Planning Assessment Act, which says that a person must not commence occupation or use the whole or any part of a building unless the necessary occupation certificate has been issued by the appropriate council or registered certifier. A vendor who ignores the requirement to provide an occupation certificate could face a fine of up to $2750.

“Purchasers wishing to avoid future insurance problems should demand that the vendor prove or establish before completion that the strata unit has been built in accordance with all applicable development conditions and consents,” Mr Hunt said.