Buyer’s Obligation – Building and Pest Inspection & Clause

Buyer’s Obligation – Building and Pest Inspection & Clause

When you buy property in Queensland, it is the obligation of the buyer to organise a building and pest inspection before the sale goes through. It is also a good idea as a seller to have your own inspections done – our Brisbane and Sunshine Coast-based Top Gun Conveyancing team have put together the following fact sheet regarding the building and pest inspection requirements in Queensland, using a typical Real Estate Institute of Queensland (REIQ) purchase contract as an example.

What’s the clause?

If the building and pest inspection clause is completed, under clause 4.1 of the standard REIQ contract it is conditional on the buyer obtaining written inspection reports from a building inspector and a pest inspector by an agreed date.

What happens after the written inspections are received?

IMPORTANT: You, as the buyer, have until 5pm on the day of inspection to advise the buyer your position – whether you are going to proceed with the purchase (that you are satisfied with your reports) or terminate the contract.

  • I am satisfied with the results of my reports, what do I need to do?  

If you are satisfied with the results of your reports you just need to let us know you are satisfied. Top Gun Conveyancing will then communicate this to the seller’s solicitors and the Real Estate agent. 

  • I am not satisfied with the results of my reports, what do I need to do?

If you are not satisfied with the results you need to provide us with a copy of the report and advise what section/s of the report you are not satisfied with. Under the contract, you have a few options. You can:

1. Terminate the contract. This will bring the contract to an end and any deposit you have paid will be refunded to you.

2. Negotiate a reduction in the purchase price. In the first instance, you should talk with the real estate agent and see if the seller will accept a price reduction. If they will, let us know and we will then communicate this to the Seller’s solicitors and get a written agreement. 

3. Negotiate for the issues to be fixed by the Seller so that you are satisfied. If you wish to do this, talk to the real estate agent and let them know exactly what you want fixed so they can see if the seller is willing to do the repairs. You should set out exactly what is wrong and exactly what you want done to fix the issue so that you are satisfied to continue with the contract. If agreed, let us know and we will then communicate this to the Seller’s solicitors and get a written agreement.     

If an agreement is reached under items 2 or 3 above, the buyer will waive their rights under the building and pest condition of the contract and will not be able to take any further issue under this clause. 

There are two important matters for a buyer to consider if successful in negotiating a reduction to the purchase price under item 2 above. They are:  

1. it is essential that you let your bank know about the price reduction as soon as possible. It is very likely that they have assessed your loan and mortgage security based on the higher purchase price, and they may need to reassess based on the lesser purchase price. It is possible that complications can arise in that process, which might take time to sort out (e.g. they might only be willing to advance a lesser amount, based on the lesser purchase price or not advance at all). They will find out inevitably when they are provided with the amended property documents, and it is better that any issues are identified sooner rather than later to avoid delays or issues with settlement.

2. your stamp (transfer) duty obligations will not necessarily be reduced.   

Remember, you only have up until 5pm on the due date nominated in the Contract to commit or withdraw.

What am I looking for in the inspection report?

The report should give you a good overview of the property – everything from minor issues, known as defects, through to major structural issues. Issues you should watch include the presence of asbestos, structures and where they have been built in relation to boundaries and many more. 

The report will also take into account sewage, waste water treatment facilities, hot water systems and retaining walls etc.

In the case of a waterfront property, generally issues of erosion won’t be included, this would require a survey. 

From a pest perspective, you don’t want to see an infestation of insects – especially termites if you are buying a property containing wood products! Bear in mind also that ‘building pests’ include things like fungal decay and moisture.

Once I supply Top Gun Conveyancing with the report, would you provide advice from what you see in the report?

No. As your conveyancer, this is outside the scope of our expertise and retainer. If you have concerns with the report, you’ll need to speak with a builder or the person who prepared the report for more information and advice. 

I’m selling my property – should I have my own independent building and pest inspection carried out before putting it on the market?

As a Seller, our team at Top Gun Conveyancing highly recommend that you do engage in your own building and pest inspection. This way you can compare what your inspector finds with what the Buyer’s inspector finds. Then you are well aware of what needs to be done so there are no surprises when you’re almost at the point of sale.

As the Buyer, am I allowed to be there when the inspector is undertaking the inspections?

Absolutely. Just like when you started your research into the property, it is a critical stage of the contract and you need to have as much information as possible. The inspector should point out any issues they find and explain how minor or serious that is and note any issues in their written report.

When should I have the inspections done?

Once you’ve decided that this is the property for you and have indicated your intentions to the seller, we recommend getting it done as soon as practicable for you and your chosen inspectors. Don’t leave it too long – as you don’t want it to push too closely to the settlement date should there be any issues discovered.

Can you supply an inspector?

As your conveyancer, Top Gun Conveyancing do not conduct building and pest inspections. This is your responsibility as a Buyer. 

We remind you that if you are buying a property in Brisbane or Queensland it is highly recommended that you obtain a building and pest inspection report. It is a requirement that the inspectors be licensed to undertake the inspections in the state of Queensland.

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