Purchasing a property is a significant undertaking. One crucial step in the process that should not be overlooked is the pre-settlement inspection. This involves the buyer inspecting the property just prior to completing the purchase. In this article, we explore the importance of pre-settlement inspections, when and how to conduct them, buyers’ rights, what to look for, and how to deal with any issues that arise during the inspection. This is general information only and you should obtain professional advice relevant to your circumstances.

Aim of Pre-Settlement Inspections

The aim of a pre-settlement inspection is to allow you, as the buyer, to assure yourself that the property is in the same condition as it was when you agreed to buy it. The inspection enables you to identify any defects or damage that may have occurred since your initial inspections. It is also an opportunity to ensure that the vendor has repaired or attended to anything agreed to be done prior to completion.

During the pre-settlement inspection, you can also confirm that all fixtures and fittings included in the sale are present and in good condition. This might include, for instance, appliances, light fittings, and other items that were part of the deal.

Obviously, the pre-settlement inspection is an important safety net, otherwise you may not find out until after settlement that there has been significant and unexpected damage to the property. Accordingly, buyers should understand their rights to a pre-settlement inspection, and ensure that the inspection goes ahead.  

How to Arrange a Pre-Settlement Inspection

The pre-settlement inspection typically occurs shortly before settlement (for example, the day before or morning of settlement), ensuring that any issues discovered can be addressed in time to allow settlement to occur on schedule. The contract of sale may specify a time frame in which the buyer can make the inspection.

The selling agent will usually arrange for access to the property to enable the inspection. For private sales, the seller will be responsible for ensuring access to the property as required under the contract. Although, as the buyer you have a right to enter the premises to conduct this inspection, it is a good practice to schedule a time that works for both parties, allowing enough time for a thorough examination of the property.

What to Look Out For

During your pre-settlement inspection, there are certain things that you should particularly note. First, you should assess the overall condition of the property, ensuring that it is in a clean and well-maintained state (if that was the condition at your previous viewings).

Next, you can look for any damage that may have arisen since your last inspection. This could include looking for issues such as damage to walls, ceilings, or floors. You should also check that utilities such as hot water and gas function properly.

You can refer to the contract at the time of the inspection to confirm that all agreed-upon fixtures and fittings are in place and functioning as expected. It is also recommended that you verify the condition and operation of any included appliances.

Dealing with Problems

Minor issues that arise during the pre-settlement inspection can usually be addressed by the agent and seller. For instance, you may negotiate for repairs or a price adjustment to address minor concerns. At this stage, just days before settlement, both parties are so committed to the sale that a fair compromise is usually quickly agreed.

In contrast, major issues can pose more significant challenges. In the event of substantial problems, such as missing inclusions or significant damage, you may not be able to settle on the date previously agreed. Major issues may require extensive repairs prior to settlement or make the property no longer suitable.

It is essential to communicate openly with the seller and your legal representative to navigate major issues effectively. In some cases, a decision may need to be reached about delaying settlement or considering your legal options.

Conclusion

The pre-settlement inspection is a crucial step in the property-buying process that should not be overlooked. It serves as the final check to ensure that the property’s condition aligns with the terms of the contract.

Understanding your rights as a buyer, knowing when and how to conduct the inspection, and being thorough in your assessment will provide peace of mind and the opportunity to address any issues before settlement. Whether dealing with minor or major problems, open communication with the seller and your legal representative is key to finding a suitable resolution.

If you or someone you know wants more information or needs help or advice, please contact us on (08) 8155 5322 or email [email protected].