Guide to pre-settlement inspections

Pre-settlement inspections (sometimes known as final inspections) are common in the lead up to settlement of your property. Normally, you have the right to one pre-settlement inspection usually on the day before or day of settlement and although these aren’t compulsory, they are highly recommended. This article explains why you might want to do a pre-settlement inspection, how to do one and what happens if you discover something surprising.

Why do you need a pre-settlement inspection?

Though a pre-settlement inspection is often a forgotten part of the steps to buying a home, it’s definitely important. Pre settlement inspections allow buyers to check that the property is what they bargained for. For example, if someone has been living in the property between the exchange of contracts and settlement, you may wish to check that the property is in the same condition as when you signed the contract. Also, if the seller has agreed to rectify any defects to the property before settlement this is your chance to check that that they have been done. A pre-settlement inspection is your last opportunity to inspect the property and deal with issues before you pay the balance of the purchase price at settlement.

How to do a pre-settlement inspection

You can do a pre-settlement inspection with the real estate agent or with the seller if it’s a private sale. Generally, you speak to the real estate agent and arrange a suitable time and then go through the property to check that everything is how it should be. If you’re buying a newly constructed property, it’s also a good idea to bring a handover inspector who can make a list of defects that the developer or builder will usually need to rectify within a reasonable time after settlement.

When looking at the property some of the key things to look out for include:

• the property is in the same condition as when you signed the contract;
• nothing that was meant to be staying in or attached to the property has been removed;
• any damage to the property;
• any rectification work that was agreed to be done by the seller before settlement has been done;
• the property is vacant (unless sold with a tenancy).

Normally sellers are very accommodating with pre-settlement inspections and may also attend and take the time to show you how things work in the house, or any key features.

What to do if you find issues

In most contracts, the property needs to be in the same condition as when the contract was signed but an allowance is made for fair wear and tear. If you find any minor issues, it is often best to speak to the agent or seller directly first to see if it can be resolved easily. If you discover a major issue, however, you may wish to consult with your lawyer to see what rights you have under the contract. Depending on the circumstances, you may be entitled to delay settlement, or negotiate for some funds to be withheld at settlement, but this isn’t always the case.

It’s important to negotiate with the seller to make sure you can find a viable outcome for all parties. You should also note that delaying settlement or starting negotiations between lawyers could lead to extra costs. You might need to weigh up the expenses and benefits before deciding on anything drastic. In most situations, any issues that arise at the pre-settlement inspections can be resolved painlessly, but it is always a good idea to do your pre settlement inspection to protect yourself and for peace of mind.

Guest author: Ellen Orton is the Head of Business Operations at OpenAgent.com.au, an online agent comparison website helping Australians to sell, buy and own property.

Catherine Fricker

Legal Advisor

Catherine is a knowledgeable and committed lawyer and is currently the Service Delivery Manager of lawlab. Catherine is committed to providing excellent service to lawlab’s clients and legal support and training to our team. Catherine loves to travel and go to the theatre as well as being an animal lover, spending as much time as she can with her dog.