The Importance of Completing a Pre-Settlement Inspection

When purchasing a property that is either a residential house and land, or residential lot in a Community Title Scheme (Body Corporate) the Real Estate Institute of Queensland (“REIQ”) Standard Contract provides the Buyer with an opportunity to inspect the Property prior to settlement.

This right is found in clause 8.2(3) of the REIQ standard conditions which specifically permits the Buyer to enter the Property on one occasion to inspect the Property before settlement.

            “8.2 Access – After reasonable notice to the Seller, the Buyer and its consultants may enter the Property: … (3) once to inspect the Property before settlement”

What is the purpose of a pre-settlement inspection?

A pre-settlement inspection gives the Buyer an opportunity to ensure that the Seller has not caused damage to the Property since the Buyer signed the Contract.  Conducting a pre-settlement inspection also gives the Buyer an opportunity to confirm that any agreed upon works, for example installing compliant smoke alarms or repairing fixtures on the Property have been completed by the Seller prior to settlement.

Any rights a Buyer may have against a Seller that fails to complete agreed upon works to the Property generally expire at settlement.  The Buyer’s rights in relation to warranties in a standard REIQ Contract range from termination of the Contract in the most serious of cases to a reduction of the purchase price for more minor issues.

Things to look out for when conducting a pre-settlement inspection

When conducting a pre-settlement inspection, it is important to confirm that the Property is in the same state as when the Contract was signed, with fair wear and tear accepted.  In addition to the condition of the Property, it is critical to ensure that any agreed upon fixtures or chattels included in the contact have remained at the Property and have not been removed by the Seller.

Is it worth your time?

For Buyers still deciding whether a pre-settlement inspection is worthwhile – the decision can be simplified to Murphy’s Law which purports that if anything can go wrong, it will.

When purchasing a Property, conducting a pre-settlement inspection can save a Buyer a considerable amount of money to repair property damage caused by the Seller.

When should a pre-settlement inspection be conducted?

For settlements taking place in the morning, we recommend that a pre-settlement inspection occur the afternoon beforehand and for settlements occurring in the afternoon, a pre-settlement inspection on the morning of settlement is acceptable.

As a Buyer is only granted one opportunity under the standard REIQ Contract to inspect the property, conducting a pre-settlement inspection too soon before settlement may provide the Seller with an opportunity to cause or not repair damage to the Property.

The pre-settlement inspection can generally be arranged directly with the real estate agent or in the absence of a real estate agent, the Seller themselves.

In the unfortunate event that you are not satisfied with the condition of the Property during your pre-settlement inspection, we recommend you contact our office immediately so that remedies can be sought to rectify the situation on your behalf prior to settlement going through.

If you require our assistance, please contact our experience property law team on 07 4944 2000.