The importance of the final inspection

When purchasing property, under general condition 22, you (or a person nominated by you) have the right to inspect your property-to-be at any reasonable time during the week before and including settlement day.

It’s not compulsory but it is a good idea to do a final inspection as close as possible to settlement day.

Inspections are generally organised via the real estate agent.  Some contracts have special conditions requiring a certain period of notice to be given.  You only have a right to one final inspection, although you could still ask for the vendor’s permission for a further inspection.  If you do identify a problem during the inspection, the vendor should permit you a further inspection so you can ensure it has been fixed.

What should you look for? You have a right to receive the property in the condition it was in on the day you signed the contract, fair wear and tear excepted, so look out for the following:

  • Is everything that was in working order still in working order?
  • Are the goods mentioned in the contract still on the property?
  • Has anything been damaged (other than through fair wear and tear)?
  • Is there a substantial amount of rubbish left on the property (so much that you are unable to have 'vacant possession' of the property)?
  • Have the vendors (or tenants, if applicable) actually vacated the property?

Remember, you need to establish that this deterioration has occurred since the time that you signed the contract.  

What can you do about it?

If you identify a problem, then you have a couple of options:

  • If there is minor damage, this doesn’t give you a right to withhold settlement or withhold any funds at settlement.  First, you should confirm with your lawyer that the damage is actually in contravention of the contract and check with the agent to make sure there hasn’t just been a misunderstanding by the vendor that he or she is happy to rectify.
  • Even if the deterioration is more than ‘fair wear and tear’ (but still only minor), you are only entitled to take action after settlement.  General Condition 24 provides a procedure to allow an amount up to $5000 to be held back from the vendor and paid to a third party, provided the purchaser also pays an equal amount to the third party.  Settlement can then proceed without delay and the dispute be resolved afterwards.
  • If there is substantial damage, the vendor is in breach of the contract and you can ask the vendor to fix the damage before settlement.  In this situation, a vendor cannot rescind or claim penalty interest if settlement is delayed.  It may be appropriate to hold back of portion of the purchase price – talk to your lawyer about this.

We do two free contract reviews for each client.  Ask the agent for the contract and vendor's statement and email to laura@nestlegal.com.au BEFORE you sign!