Building & Pest Condition

We recommend that Buyers make the contract subject to a Building and Pest inspection to ensure there are no defects in the property that are costly to rectify. In the REIQ contract of sale for residential properties, it is standard to include a building and pest inspection date. It is up to the Buyer and Seller to agree as to the length of the condition in the contract. Buyers must provide notice to one of the following by 5:00pm on the building and pest inspection date. ​

  1. The Buyer is satisfied with the Building and Pest inspection and the contract is unconditional (subject to any other conditions of the contract).
  2. ​The Buyer requests the defects outlined in the report to be rectified on or before settlement with time to remain of the essence. The Seller is not obliged to agree to any request.
  3. Request a price reduction for an amount by way of adjustment at settlement in order to compensate the Buyer to rectify the defects outlined in the reports. Any negotiations must be agreed to by the Seller in writing before the condition expires.
  4. ​Request an extension to the Building and Pest condition. Buyers should advise their solicitor to request an extension at least two business days before the building and pest inspection date expires. The Seller must confirm in writing if they are agreeable to an extension.
  5. ​Terminate the contract​

It is important that both the Buyer and Seller diarise the Building and Pest condition date. The Seller will have the right to terminate the contract if the Buyer has not given notice to the Seller by 5:00pm on the due date. ​

The Building and Pest report will outline the defects in the property (if any). This can include small to major structural issues. If there are issues outlined in the report then the Buyer must obtain advice from the inspector in order to determine the specific work that will be required to fix the defect. Further inspections may be required from tradesman (i.e. a plumber) to determine the work required in order to fix the defect. The Buyer should then consult with their legal representative and discuss the best avenues to address the issues identified in the report.

Sellers are not obliged under the REIQ contract to fix all issues that are identified report and Buyers do not have an automatic right to terminate the contract.​

The REIQ contract standard terms and conditions states that ‘Buyers must act reasonably’ in order to terminate the contract. Acting reasonably is a grey area and a number of factors are considered which include the age of the property and if the defect was evident when the property was advertised to the Buyer. If the defect is a minor cosmetic issue (i.e. a cracked tile) then the Buyer does not have grounds to terminate the contract or delay settlement however, if the defect is a major issue (i.e. structural or termite infestation) then it is likely the Buyer will have grounds to terminate the contract or delay settlement in order for the Seller to address the issue. ​

We recommend the following: ​

  1. Instruct a Building and Pest inspector to inspect the property as soon as the contract has been executed by both parties. It is important there is sufficient time for the Buyer to analyse the report, to further investigate any defects, obtain legal advice and negotiate a reduction in purchase price at settlement or have the Seller provide an undertaking to rectify the defect prior to settlement date.
  2. The Buyer should attend the Building and Pest inspection. The inspector can provide additional information on any defects that are not included in the report and it is an opportunity for the Buyer to make further enquiries to any concerns they may have with the property.
  3. The Buyer diarises the building and pest condition date of the contract as time remains of the essence and is exposed to termination of the contract if notice has not been provided to the Seller’s solicitor advising they are satisfied with the building and pest inspection.

Please contact our Everton Park or Oxley office or complete our property enquiry form if we can be of assistance.