The standard condition in Queensland conveyancing contracts will include a building and pest inspection condition. But what is it exactly and how can it affect either the buyer and/or the seller?
What is a Building & Pest Condition?
In order to put forward a “formal” offer on a property in Australia you will most likely be asked to sign a contract and pay a deposit. It is therefore important as a potential buyer to have the conveyancing contract made subject to a building and pest inspection condition. This is especially important if you intend to buy an older property.
This condition will ensure a buyer is protected if there are major defects uncovered in the building and pest inspection. The condition is usually due 1-3 weeks after the contract date.
Ultimately, a building and pest condition will allow buyers to enlist a licensed building and pest inspector to carry out an inspection of the condition of the property, and to withdraw from the deal in the event that they receive an unsatisfactory report – but only in certain circumstances.
In this article we’ll talk more about these circumstances and what legal rights buyers and sellers have in regards to building and pest condition.
To act ‘reasonably’
If a potential buyer receives a non-satisfactory report from the building and pest inspection, they may terminate the contract. However, the buyer must ‘act reasonably’.
The requirement to act reasonably means that the buyer must have good reason for terminating the contract on the grounds of the building and pest inspection condition. What is considered reasonable depends on the particular circumstances in the conveyance.
The buyer will generally not be entitled to terminate the contract under the building and pest condition simply because the buyer is not happy about some minor defect.
A number of factors is considered when determining what’s reasonable, including:
- The age of the property
- The quantity and severity of the issues; and
- If the issues were obvious at the time of inspection and when the price was negotiated.
Provided the contract is terminated lawfully, the buyer will be entitled to a reimbursement of the deposit. This is regardless of which party terminates under the building and pest conditions.
A copy of the building and pest reports must be provided to both parties, if requested.
Negotiating under the condition
The inspections will identify any existing and potential defects with the property, but the seller is under no obligation to rectify any issues raised by the inspectors. In case major defects are uncovered, the buyer’s only right is to terminate the contract.
However, the reports can be a basis to negotiate with the seller about rectifying any defects, or reducing the price of the property. Any negotiated changes to the contract must be agreed in writing. Ideally, this should take place before the inspection date, otherwise the seller may terminate the contract.
Buyers should be aware that entering into negotiations under the building and pest inspection condition can leave them vulnerable to missing the condition deadline. They buyer must usually confirm the results of the inspection reports (and whether or not they’re satisfactory) by 5 pm on the due date. If the buyer has not confirmed by 5 pm the seller has an automatic right to terminate the contract.
At Inspect My Home, we recommend getting a building and pest inspection as soon as possible to have ample time to consider the results of that report prior to the condition due date.
Pre-purchase building reports with Inspect My Home
Our pre-purchase property inspections allow you to make an informed decision about the purchase. You can either proceed with buying the property, renegotiate, or back out.
Call us today at 1 300 337 447 or book your appointment online.