The only alternative scenario I see, which I think is very messy, is for the OC to demand the current owner reinstate the roof space and in turn the current owner could sue the vendor (assuming he can be located). Messy.
To misquote the Monty Python cheese shop sketch, I don’t care how f—- messy it is. The previous owner has stolen common property (or the right to change it) and didn’t tell the new owner. So someone steals my car and then sells it to you. I say, hey, “That’s my car” and you say, the guy who sold it to me didn’t tell me it was stolen and I bought it in good faith. So I say, “Okay, you’d better keep it, then.” I don’t think so.
Have a look at this: Why Some Property Contracts Omit Renovation Details (& How It Impacts You) – Settled
And this: Unapproved renovations – the vendor perspective – KLH & Associates
And this: Buying Properties with unapproved renovations – Alliance Lawyers
In the latter it says:
If there is a breach of s52A(2)(b) and a Vendor also fails to disclose unapproved works or structures on the property at the time of entering the contract, the Purchaser is entitled to rescission and the repayment of the deposit at any time before settlement date Regulation 16(1)(b) and 17 of the Conveyancing (Sale of Land) Regulation 2010, provided that conditions under Regulation 16(1)(3) are met.
In Huang v Ceylan [2018] NSWSC 306, the Vendor advertised for sale a three bedroom unit. In fact the development approval provided for the apartment to contain two bedrooms. A wall had been constructed along an open “media room” thereby enclosing it to create a third bedroom. The Purchaser discovered the unapproved work after exchange of contract. The Supreme Court in that found the Vendor had breached his disclosure obligations under s52A(2)(b) and ordered the return of the Purchaser’s deposit.
Then there’s this:
Don’t risk buying a property with illegal building work | The Real Estate Conversation
Does a seller need to disclose unapproved building work to a buyer?
Generally, there is no legal obligation for a seller to do so. The old adage of ‘Buyer Beware’ still very much applies with illegal building works – once the contract is signed the buyer inherits these problems.
As for buying “in good faith” – you inspect an apartment for sale, the vendor shows off the renovation and you don’t get your solicitor or conveyancer to check that it was approved. That’s not good faith – that’s blind optimism and the other owners in the scheme shouldn’t have to pay for it.
In the OP’s case above, the council could order the current owner to reinstate the apartment but there’s no way the OC can or should be held liable.
Hopefully these links will have elevated you closer to informed observer, if not quite bush lawyer status.