Pre Settlement Inspections – What Are My Rights?

Buying a property is one of the most significant investments most people make in their lives. As the settlement date approaches, excitement builds, but it’s important to ensure that everything is in order before the final transaction.

Part of this process is attending a pre-settlement property inspection to ensure the property is in reasonably the same condition as it was when the Buyer signed the contract of sale, or initially inspected it.

This step is a crucial part of the conveyancing process, giving buyers peace of mind and ensuring that the property they are about to purchase meets all agreed-upon conditions at the end of the settlement period.

What are Pre Settlement Inspections?

A pre-settlement inspection is the buyer’s opportunity to inspect the property before the settlement takes place, and is typically conducted in the week leading up to the settlement date. The primary purpose is to verify that the property is in the same condition as when the contract was signed, that any agreed-upon repairs have been completed, and that any included chattels remain with the property.

What is a Pre-Settlement Inspection Not ?

A pre-settlement inspection is not a second building and pest inspection, and it offers the Buyer limited rights to ask for changes. It is not an additional opportunity to identify defects. It is to satisfy the Buyer that the property’s condition is reasonably the same as at the initial inspection, and that the Seller has not damaged or neglected the property.

What Gives the Buyer the Right to a Pre-Settlement Inspection?

The right to a pre-settlement inspection is typically in the standard terms of the contract of sale, and gives the buyer the right to access the property for one pre settlement inspection. The details of the standard terms will vary between standard form contracts, and according to the law of whichever state or territory of Australia the property is situated in. It may also be modified by special condition.

Because of the difference in how these clauses may be drafted, it’s important to obtain legal advice from your conveyancer.

The property is to be reasonably in the condition in which it was when the Buyer signed the contract or initially inspected it. It’s important to note that there is no obligation for the property to be clean (unless there is a special condition in the contract of sale to this effect).

How to Arrange a Pre Settlement Inspection

Pre settlement inspections are arranged through the Buyers and Sellers conveyancers and the real estate agent.

Buyers Risk vs Sellers Responsibility

The Vendor’s responsibility throughout the settlement period is to maintain and use the property reasonably, not to damage the property, and not to do anything that may significantly alter it or cause expense to the Buyer down the road.

However, in situations where the property is at the Buyer’s risk (in Queensland, for instance), this responsibility of the Seller’s must be balanced against the fact that the risk of damage to the property falls to the buyer from 5:00pm on the first business day after the contract date – underscoring the importance of Buyers taking out insurance as soon as they are under contract.

What Happens if the Buyer Isn’t Happy With The Pre Settlement Inspection?

As we’ve covered, the pre settlement inspection ensures the Buyer has the opportunity to inspect the property prior to settlement to ascertain whether the property is in reasonably the same condition as it was when the contract of sale was entered into.

If the Buyer has concerns after the final inspection, they should raise them with their conveyancer immediately. While the Seller does have an obligation to use the property reasonably until settlement, the Buyer should keep in mind that they too must act reasonably, and that refusing to settle over trivial issues could potentially result in the Buyer being in default and liable for damages and/or forfeiting their deposit.

It is critical that both Buyer and Seller seek legal advice as to their rights and obligations before taking any action.

More Questions?

If you have more questions about the settlement process, the final pre settlement inspection, or any other aspect of conveyancing, give our friendly, expert team a call today, or contact us via our contact form.

The above is not legal advice, and is general information only.