When purchasing a property, obtaining thorough building and pest inspection reports from a registered building practitioner and licensed pest control operator is essential to ensure the property's condition. If unsatisfied with the inspection results, Buyers may terminate the contract, provided the Contract has been formed subject to satisfactory B&P inspection/s.
What are the Buyer's obligations for building and pest inspection reports?
If the Contract is subject to satisfactory B&P inspection reports on the Property, the buyer must take all reasonable steps to obtain the report. They must use a registered building practitioner and licensed pest control operator to conduct a building and pest inspection and provide written reports. Otherwise they may not be able to terminate the Contract on the grounds that they are not satisfied with the B&P inspection as the seller may request supporting evidence.
What should building and pest inspection reports cover under the Standard Contract?
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 wastewater 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.
Who is responsible for arranging building and pest inspections?
The Buyer must arrange for a licensed inspector/s to conduct a building and pest inspections and provide written reports.
What can a Buyer do if they are not satisfied with the building and pest inspection reports?
If a Buyer is not satisfied with the results of the B&P reports due to major structural defects or major pest infestation, then they terminate the contract. If a Buyer terminates, the Seller may request a copy of the report from the buyer.
Can the Buyer request a price reduction or repairs based on the inspection reports?
If a Buyer is not satisfied with the results of the B&P reports due to minor defects, the Buyer does not have a right to reduce the purchase price or to require the Seller to carry out any works. However, parties may negotiate in relation to a price reduction or for works to be carried out. Any price reduction may affect an existing finance approval or prompt the financier to require a further valuation of the property or to impose additional conditions in relation to your finance approval.
When must Buyers notify the Seller about their decision on the building and pest reports?
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.
What happens if the Buyer doesn't notify the Seller of their decision on the inspection reports by the deadline?
If the Buyer fails to provide notice to the Seller, the condition will be deemed to have been satisfied and the contract continues. This means the Buyer waives their rights and shall proceed to settlement.
What can a Buyer do if they don't have aninspection report by the inspection date?
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.
What should a Buyer do if they are satisfied with the building and pest inspection report?
If a Buyer is satisfied with the report, they may give notice to the Seller that the B&P condition is satisfied. Alternatively, they may wait until the due date lapses and the condition is deemed to have been satisfied.
What happens to the inspection reports if a Buyer terminates the contract?
If a Buyer terminates, the Seller may request a copy of the reports and they must be provided without delay.
Can a Buyer waive the building and pest inspection condition?
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.
