PRE-PURCHASE BUILDING INSPECTIONS

Almost invariably, buyers of residential property seek to include in their offer to purchase a clause that protects them from unbeknownst building defects.

This is fair enough although a decade ago such contractual conditions were relatively rare. In those days, real estate agents often drafted building inspection clauses that enabled would-be buyers to avoid the contract in the event the building inspector identified even a minor building fault. Given almost all residential buildings, especially the older style homes throughout the Fremantle area, have some minor failings or problems of a maintenance nature, these early clauses became a “subject to changing your mind” provision for the buyer.

In an effort to balance the ledger, REIWA developed industry standard Building Inspection Clauses designed to protect the buyer from buying a “lemon” whilst safeguarding the seller against a last minute contractual failure due to a cracked roof tile. Whilst buyers and sellers remain free to negotiate terms around the condition of the building as they see fit, most modern sales agreements will enable a buyer to void the contract only in the event the home is structurally compromised, unsound or has a significant structural defect that the seller is unprepared to repair.

At the point of contract, willing buyers are usually satisfied with such clauses and view them as a reasonable contractual provision that protects both parties. However, building inspections are usually very thorough and buyers are often surprised at the amount of identified (mostly minor) faults in such reports.

Whilst the quality, cost and style of building inspection services varies widely, in almost every case, the conclusion is that aside from a collection of minor defects, the dwelling is structurally sound. According to many builders, if a dwelling is “unsound”, it is often immediately obvious to the layperson.

After receipt of the builder’s report, buyers often then approach the agent with a list of requests to the seller to make repairs of a non-structural nature prior to settlement despite the clear intent of the contractual agreement. This is a natural response and often sellers happily oblige beyond their contractual duties, but buyers must have a realistic expectation of a building’s condition along with the responsibilities of the seller when choosing to buy an established home.

By Hayden Groves – REIWA President & dG Principal