When purchasing a property, it is important that the Purchaser investigates the property's condition.
It is highly advisable to obtain a building and/or pest inspection report before singing the contract or before the expiry of the cooling off period, especially if you are purchasing standalone houses or dwellings in a community title scheme. If unsatisfied with the inspection results, you can rescind the contract, or — if the contract is not signed and exchanged—simply not go ahead with the purchase.
You should get the Vendor’s consent via the real estate agent to have the property inspected. It can take inspectors approximately 2-3 business days to organise an inspection time and prepare the report. So ensure you order the report as soon as possible so that the you have sufficient time to receive the completed report and determine whether you would like to proceed with the purchase.
Inspectors generally check all accessible parts of the property, including interior and exterior of the building, roof space, under-floor space, roof exterior and site. You can also ask for certain items or parts of the property to be inspected, such as visible signs of asbestos, existence of an operable electrical safety switch, operable smoke alarms.
The report normally includes matters regarding the garage, carport, garden shed, separate laundry or toilet, small non-structural retaining wall, steps, fencing, surface water drainage, storm water run-off, paths and driveways, visual damage caused by termites.
The report does not deal with every aspect of the property, but rather identify any major problems visible at the time of the inspection subject to the age and type of property.
It will not generally include: parts of the property not available to be inspected (e.g. due to access issue), matters outside the inspector’s expertise, an estimate of repair costs, termite detection.
An inspector would not normally check things such as footings, concealed damp-proofing, electrical wiring and smoke detectors, plumbing, drainage, gas fitting, air conditioning, swimming pools and pool equipment, watering systems, fireplaces and chimneys, alarm and intercom systems, carpet and lino, appliances (such as dishwashers, insinkerators, ovens, ducted vacuum systems, hot plates and range hoods), paint coatings, every opening window, television reception.
The Purchaser must arrange for a qualified inspector to conduct a building and pest inspection and provide written report/s.
If you are not satisfied with the results of the building and/or pest reports:
If you have not signed and exchanged the contracts, you can try to negotiate a new price or for the Vendor to rectify any defects found by contract signing or settlement. You can also simply not proceed with the purchase.If the contracts are exchanged and under the cooling off period, you can rescind the contract. Alternatively, you can consider negotiating either that rectifications be done by the Vendor before settlement or that an amount is allowed in your favour at settlement so that you can attend to rectifications yourself after settlement.
If the contracts are exchanged and unconditional (e.g. the property is purchased at auction, or the cooling off period has expired or been waived), you need to proceed to settlement.
The Purchaser can attempt to request for an amount to be adjusted in their favour at settlement on account of the costs to repair the defects identified on the report, or for repairs to be done by the Vendor before settlement. The Vendor is not obliged to agree to this but is more likely to agree if the contract is still under the cooling off period. It is advisable that the outcome of the request is reflected in writing in the contract, usually by way of special condition.
If you want to rescind the Contract due to unsatisfactory Building and Pest reports, this must be done prior to 5pm on the cooling off period expiry date. If the contracts are exchanged and unconditional (e.g. the property is purchased at auction, or the cooling off period has expired or been waived), you need to proceed to settlement.
If you do not have a report by the cooling off period expiry date, you can seek an extension. Bear in mind that the Vendor may not grant this in which case you must decide whether you wish to proceed regardless or rescind the contract under the cooling off period.It is advisable not to request for an extension too close to the expiry time and date so that you have sufficient time to decide your next step in case the extension request is rejected.
When purchasing a property, obtaining thorough building and pest inspection reports from licensed inspectors is essential to ensure the property's condition. If unsatisfied with the inspection results, Buyers can terminate the contract, provided the Contract has been formed subject to satisfactory B&P inspection/s.
If the Contract is subject to satisfactory B&P inspection reports on the Property, the Buyer must take all reasonable steps to obtain at least one report. They must use licensed inspectors and the reports must be in writing, otherwise they will not be able to terminate the Contract on the grounds that they are not satisfied with the B&P inspection.
In the case of the Standard Contract, the reports may relate to the land, the improvements on the land and any included chattels. The improvements will include not only the building structures on the land but also additional items such as sewage and waste water treatment facilities, hot water systems, retaining walls or revetment walls within the land as these items might be expensive to repair or replace in the future. Buyers should ensure any inspector is suitably qualified.
The Buyer must arrange for a licensed inspector/s to conduct a building and pest inspections and provide written reports.
If the Buyer is not satisfied with the results of the building and/or pest reports, they have the right to terminate the Contract (provided acting reasonably).
The Buyer doesn’t have the right to reduce the price or require the Seller to undertake any works, however the Buyer and Seller may agree to vary the terms of the contract by adjusting the price or agreeing in writing to certain steps being undertaken.
Buyers must notify the Seller in writing on or before 5pm on the inspection condition expiry date as to whether or not they are satisfied with their B&P reports and wish to terminate the Contract.
If the Buyer elects to terminate the Contract due to unsatisfactory Building and Pest reports, this must be done prior to 5pm on the due date. If the Buyer does not provide notice to the Seller by this time, the Seller will have rights to terminate the Contract at 5.01pm.
If the Buyer does not notify the Seller in writing before 5pm on the inspection date of satisfaction, waiver or dissatisfaction, the Contract continues and both parties have a right to terminate. Buyers continue having a right to give notice of satisfactory B&P or waiver but only if it is received by the Seller before they terminate.
If a Buyer does not have a report by the inspection date they can seek an extension, however, the Seller may not agree to the extension.
If a Buyer is satisfied with the report, they should give notice to the Seller that the B&P condition is satisfied.
If a Buyer terminates, the Seller is entitled to request a copy of the reports and they must be provided without delay.
A Buyer may waive the benefit of the condition so that the Contract will no longer be subject to this condition and the Buyer will be obliged to complete the Contract. The Buyer would then not have any recourse against the Seller under this condition for issues which are raised in the B&P reports.
Disclaimer: Every property transaction is different, and the information provided may not be relevant to your circumstances. By using this site you agree that the information provided is for general purposes only and does not constitute legal, financial, or professional advice.
