Building Inspection Reports – Tips and Tricks - JHK Legal Commercial Lawyers

17 April 2019

Building Inspection Reports – Tips and Tricks

When buying a property, it is important that buyers protect themselves by engaging professionals to complete building and pest inspections to identify any defects prior to purchasing.

To do this, it is important to ensure that, where you want to negotiate or can negotiate for conditional clauses, clauses allowing for the completion of building and pest inspections are not only included in the Contract of Sale but worded carefully to enable a buyer to withdraw from the Contract of Sale and have their deposit refunded in full should the inspection reveal defects.

In particular, there are significant differences between the terms “defects”, “major structural defects” and “structural defects” and it is important to ensure that care is taken to make certain that the conditions are negotiated and drafted correctly prior to signing the Contract of Sale. If not, it may cost the buyer thousands of dollars down the line.

When getting a building inspection report completed, it is important to carefully consider what is included and excluded from the inspection and report. For example, a building inspection will usually include:

  • what the inspector can easily see (building inspectors usually need approximately 600mm clearance under floors and around objects to inspect safely);
  • minor defects (items requiring regular repairs and maintenance which is common to homes of a similar type or age);
  • major defects (internal or external primary load bearing building element which seriously affects the structural integrity of the home); and
  • urgent safety hazards (a defect where something is no longer fit for use, requires urgent repair to avoid unsafe conditions or to avoid further substantial deterioration of the property).

However, building inspections usually do not include inspections of items such as:

  • anything over 3m high;
  • anything behind or underneath furniture;
  • compliance with building regulations, legislation or local laws or by-laws;
  • identification of unauthorised or non-compliant building work;
  • roof plumbing, general gas, water and sanitary plumbing;
  • electrical wiring, alarms, garage doors;
  • identification of toxic mould;
  • asbestos;
  • swimming pool fencing;
  • grey water and rainwater tanks; and
  • anything below the ground

It is therefore recommended that buyers request a copy of their building or pest inspector’s disclaimer disclosure and scope document and consider it carefully prior to engaging them to complete the inspection. After reviewing these documents, if a buyer has concerns about what is excluded, then the buyer may wish to request add-on services to their inspections such as plumbing, gas, electrical termite, pool fence or asbestos to suit the buyer’s specific needs.

Building and pest inspections can also be used to negotiate savings should issues be identified in a buyer’s building or pest reports such as termite damage, cracks or leaks structural issues or other complaints. If issues such as the above are identified, provided a buyer has a correctly drafted condition in their Contract of Sale, then consideration will need to be given to whether the buyer still wants to proceed with the purchase. Provided the buyer does decide to proceed, then it may also be possible to negotiate with the seller to either to have the items remedied by the seller prior to settlement or for a price reduction to compensate the buyer for the anticipated cost of the repairs to remedy the identified issues.

JHK Legal’s subsidiary MKP Property Lawyers can assist buyers to protect themselves by reviewing, drafting and advising on Contracts of Sale and in particular building and pest conditions prior to execution.  MKP Property Lawyers can also assist with negotiating with the seller over the results of the building and pest reports. Should you have any questions about building and pest reports or require assistance with your next conveyance, please give MKP Property Lawyers a call on (07) 3859 4500.

Associate, Michelle Kelly