Buying a Property: What are your rights under the Building and Pest condition of your Contract
Imagine purchasing your dream home only to find out post settlement that it has a termite infestation or substantial structural damage. These hidden issues can lead to costly out of pocket expenses for unsuspecting Buyers.
How can you ensure that this does not happen to you?
At Richard Hoare & Co Solicitors we recommend that all Buyers make their Contract subject to a Building and Pest Inspection, to ensure that there are no hidden defects or issues with the property.
In accordance with the Standard REIQ Terms of Contract, a Buyer can elect to make the Contract conditional upon the Buyer obtaining a written Building Report from a Building Inspector and a written Pest Report from a Pest Inspector, on the property, by the Inspection Date.
What will the inspector do?
The Inspector will attend at the property and conduct a thorough inspection of the property to look for any defects, damage or evidence of pest activity. Once the inspection is complete, they must then provide a copy of the report, detailing their findings, to the Buyer for their consideration.
What is next?
Once the report has been perused, it is then the Buyers obligation to give notice to the Seller, by no later than 5:00 pm on the due date, whether a satisfactory report has been obtained, and whether they wish to satisfy this condition. If a major issue is found, the Buyer may wish to terminate the Contract, in accordance with the condition, and must advise the Seller accordingly. Any deposit paid will then be refunded to the Buyer, and the matter will be at an end.
What if an issue is found, but I want to continue with the Contact, can I negotiate?
If defects or evidence of pest activity is found, the Buyer must advise the Seller of the issue, and provide a copy of the Report, for their perusal. The Buyer must also request the repairs or pest treatment be conducted, prior to settlement, or whether a reduction of purchase price is preferred to cover the work required following settlement. The Seller may then consider the Buyers request and/or counter offer in relation to the requested repairs. Be aware that the Seller is under no obligation to agree to the repairs.
The Seller's Rights
The Seller may elect to decline a reduction of purchase price and/or to repair the issues found. It will then become the Buyers responsibility as to whether they wish to proceed with the matter, knowing of the defects or pest evidence found. Therefore, electing to continue the matter and wear the costs following settlement. At this stage, the Buyer would need to advise the Seller that they are now satisfied or waive their rights under the condition.
Remember, all times, that you need to be seen as acting reasonably in these matters. A broken handle is not sufficient grounds to terminate a Contract.
Disclaimer: This publication is not intended to be comprehensive nor does it constitute legal advice. We are unable to ensure the information is current and there is no guarantee in relation to accuracy. You should seek legal or other professional advice before acting or relying on any of the content of this publication.
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