Building & Pest Inspection

Contributed by Frank Higginson, Hynes Legal – 3 August 2020

Building & Pest Inspection

So what happens if the building and pest inspection is not satisfactory?

If the building and pest inspection has revealed some potential structural or cosmetic defects or pests like termites, etc, you have a decision to make. The first is whether to make an issue of it. A chipped tile is hardly worthy of complaint. A termite nest in the wall of the unit would be.

There are three ways to move forward.

The first is to terminate the contract, authorise the release the deposit and walk away from the contract.

The second is to simply accept the issues that were identified in the inspection and remain aware that you may need to deal with them after settlement.

The third (and most common option) is to negotiate with each other in relation to the issues identified. That negotiation usually results in one of two outcomes:

1. A discount off the price of the unit to compensate you for the works that will need to done after settlement. This could be quantified in terms of particular items (i.e. $100 for this, $300 for that, and so on) or it can just simply be a nominal amount that both parties believe is reasonable in the circumstances – usually referencing back to what you may have to spend.

2. The seller agreeing to rectify the issues to your satisfaction before settlement. This option is usually the more problematic one because the seller:

a. is not necessarily motivated to complete the works in the way that you might otherwise choose; and
b. the seller might not use the tradesman or materials that you would normally choose.

There is also the issue regarding what happens if the works are not completed to your satisfaction.

A seller will not usually agree to the contract being subject to you being satisfied with the works, as this means the contract can be terminated up to the date that the clause must be satisfied by (which can be very close to settlement at times). It also creates a problem for you in that if it gets that close to settlement and the works are not completed (whether at all or to your satisfaction), you are hardly likely to be in the position where you want to terminate the contract, being that close to settlement.

If the issue is serious enough we think the cleanest way to deal with it is to simply agree to an amount being taken off the price of the unit. You can then take control of what needs to be done after settlement. Naturally, the seller needs to agree to this.

It is also far more cost effective to negotiate this concession through the agent or broker. Lawyers can be very expensive negotiating tools – but will always be able to get involved if needed.
Ultimately, the decision is yours to make.

Questions? Email us at managementrights@hyneslegal.com.au

Building & Pest Inspection

Contributed by Frank Higginson, Hynes Legal – 3 August 2020

Building & Pest Inspection

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