What to look for in a Pre-settlement Inspection

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When you are purchasing a property under the standard Sale and Purchase Agreement you have the right to do a final inspection of the property prior to settlement (except in the case of some mortgagee sales). This inspection gives you the opportunity to carefully check through the property before paying the settlement funds across to the Vendor. In this inspection there are 3 main things you should be checking for:

1. Has the Vendor / Tenant moved out of the property?

The Vendor is obliged to give you vacant possession of the property unless you have agreed to take on a tenant. This means that the previous occupants of the property whether they be the owners or their tenants need to move out prior to settlement. If they are not able to give vacant possession you do not have to settle and can charge them penalty interest until such time as the premises have been vacated.

2. Have the Vendors left the chattels as shown on the chattels list of the Sale and Purchase Agreement?

The vendor is obliged to leave the floor coverings, window coverings, light fittings, stove and any other chattels listed on the chattels list (dishwashers, rangehood, heated towel rails, alarm systems etc). There is nothing in the Agreement to say that the appliances need to be in good working order. You purchase them in the condition they were in when you signed the agreement so if the dishwasher does not work or a tap is leaking and thats how it was when you signed you have to accept it as is.

There can be disputes as to if damage to chattels was pre-existing or recent and I have come across cases where Vendors have removed chattels such as light fittings and drapes and replaced them with cheaper/older ones. This can be difficult for purchasers to prove so its always a good idea to take photos when you first view the property so that you have evidence on settlement date to show if anything has been damaged or removed.

3. Has anything been damaged since signing the Sale and Purchase Agreement?

You bought the house in the condition it was in on signing the agreement so as with the chattels you cannot demand that the Vendor fix pre-existing issues. You need to check the property for any damage that may have occurred since the date of entering the contract. Some examples I have seen recently include a vacant houses windows being smashed and walls tagged by vandals, a moving truck reversing into the garage door and walls being damaged while moving out bulky furniture.

If in your final inspection you find that something has been damaged or removed you need to immediately notify your solicitor who will advise you of your rights and negotiate with the Vendors solicitor to get it rectified. In some instances the Vendor attends to the issues immediately getting a tradesman out there to fix the problem on settlement day, in other cases they may agree to let the purchaser withhold some money until the work has been done or even deduct the approximate cost of fixing the problem from the purchase price. In some circumstances the Vendor may dispute the problem or claim that it was pre-esxisting, if this is the case the purchase is obliged to settle in full and may claim damages from the Vendor following settlement.

Unfortunately the standard Sale and Purchase Agreement does not stipulate that the property needs to be cleaned prior to settlement. Dirty bathrooms and kitchens and rubbish being left on the property is the most common complaint raised by purchasers doing their final inspections. If you want to ensure that the property is spic and span, ready for you to move in you can insert a condition in the sale and purchase agreement stating that the carpets or entire house should be commercially cleaned by the Vendor prior to settlement.

Remember that conditions cannot be added retrospectively, so its essential to get legal advice prior to signing a Sale and Purchase Agreement.

2017-06-27T12:15:41+00:00 Property Law|