What Building Inspection Reports Don’t Cover

Posted on February 3, 2008 by | 12 Comments

Tim O'Dwyer M.A., LL.B by Tim O’Dwyer M.A., LL.B
Solicitor
Consumer Advocate
watchdog@argonautlegal.com.au


 


Home buyers must always ensure, when contracting subject to satisfactory building inspection reports, that adequate time has been provided for this in their contracts.


In my experience, the ideal time is 30 days from the contract date.  This allows for the inspector to make his inspection, prepare his report, deliver the report to you, and for you to consider it.  30 days also allows time for any supplementary inspections which may be needed from other professionals, and for you to find out the likely costs of rectifying any matters of concern raised in the report.  Finally more time is needed than the agents’ usual period of 14 days because buyers who have received a less than satisfactory report may wish to renegotiate the contract price with the sellers. 


 


The most important thing a buyer should do when selecting a building inspector (and definitely not one recommended by the seller’s agent) is to ask for a sample copy of the inspector’s standard report.  You may be horrified to find that the sample report contains more pages detailing what the inspection does not cover (and what issues are excluded) than any actual reporting on the property inspected.  Below are parts of the exclusions and disclaimers from a building inspection report which a client of mine recently received.  Nevertheless the inspector described the property as “structually sound”.  Be afraid, very afraid.

.

More about  “What Building Inspection Reports Don’t Cover”…



Lawyers Conveyancing is proud to sponsor the REIC

Tags: , , , ,
Categorised in: Uncategorised

12 Comments

  • Craig Brown says:

    Tim

    Wouldn’t the 14 days cooling off period be sufficient to organise the initial inspection and digest the results?

    If there is a red flag you can (should?) then withdraw the offer and start negotiations from scratch, allowing time to organise quotes for repairs and whatever else is needed.

    As for choosing which supplier will do your inspections – make sure they are a member of a professional body (such as the master builders association) and that they have professional indemnity insurance.

    Cheers
    Craig Brown
    Evaluator
    Australian Property Reports

  • In Victoria the Real Estate Institute of Victoria (REIV) provides its estate agent members with the means to nobble purchasers’ attempts to protect themselves in the form of its “standard” REIV building inspection condition.

    The estate agent inserts this condition into the contract, supposedly on behalf of the purchaser, and advises the purchaser that there is no need for further legal advice, as the REIV special condition will protect the purchaser.

    This nasty special condition has been the cause of much misery for real estate consumers, setting purchaser against vendor, while the estate agent snatches the commission and moves on to the next sale.

    Does this practice exist in other States?

  • http:// says:

    Thanks for your comments, Craig.

    When my buyer clients are not satisfied with their reports, I point out that one of three boxes can be ticked: crash the contract, ask for a price reduction or ask the seller to fix up the problems.

    Sellers then can tick one of five boxes: here is your deposit back, accept the price reduction, go jump on the price reduction, offer a lesser reduction or “my brother-in-law is a builder/plumber/electrician/handyman and he’ll fix it.

    Needless to say (once again), the ACT’s statutory requirement that sellers provide up front to all prospective buyers recent building and pest inspection reports makes more sense. It must be cheaper all round for all concerned if there is only one pair of inspection reports. Of couse the ACT law makes inspectors lpersonally liable to buyers for any report deficiencies.

    It is a pity elsewhere that few agents ever require seller clents to obtain their own reports before going on the market, and thus find out what sellers might need either to fix up first or to disclose (now that’s a dirty word in most real estate agency circles).

  • http:// says:

    In a perfect world everyone would have thousands of dollars to spend on having everything inspected…(imagine the cost of a geotech and structural engineer!)

  • In a perfect world no-one would be keeping purchasers in the dark, wallpapering over cracks, or tricking purchasers into accepting the unacceptable. Thus, in a perfect world no-one would need inspections.

  • http:// says:

    OOPS! MY THIRD PARA ABOVE SHOULD READ:

    Sellers then can tick one of five boxes: here is your deposit back, we accept the price reduction, you can go jump in the lake, we offer a lesser reduction or “my brother-in-law is a builder/plumber/electrician/handyman and he’ll fix it”.

  • http:// says:

    Yes, and this has happened to us. So what happens if, on the day prior to settlement, when we have given notice on our house to vacate and made numerous other arrangements, that the repairs have not been done as requested (by a tradesman to a professional standard)?? What can we do?

  • http:// says:

    In response to ellie I’d suggest she ask her solicitor this question. More generally, the wisest thing for a buyer is only to convert inspection dissatisfaction into a dollars-and-cents price reduction, and fix the problems(s) up yourself later. Agreeing to the seller’s attending to repairs can often result in the problem which ellie highlights. If this is the only solution, at the time of agreement the settlement date should ideally be extended and an earlier time limit set for the seller to complete the repairs to the buyer’s satisfaction.

  • hortonsue says:

    Tim, I believe if repairs are necessary to rectify defects the purchaser should be the person arranging for and funding the repair work not the owner of the property if this can be negotiated. If a purchaser is going ahead with the purchase they need to have the invoices in their own names for warranty and insurance reasons etc. If the owner undertakes the repairs once the property has changed hands these warranties may not be not valid.
    The purchaser can have the costs of the repairs negotiated into the settlement. If the owners are not comfotrable with this then they can get their own 3 quotes from reputable/licenced companies or trades and negotiate a price difference if there is one.
    I think the warranty/insurance issue should not be overlooked especially if serious items such as drainage, roofing or foundation work is involved.
    Its worth doing a bit of research into what will happen with a warranty or insurance cover once the property has changed hands.

  • http:// says:

    Here is an interesting comment on this topic which I received from a conscientious and concerned real estate agenr:

    “A week into a contract I learned, as the sellers’ agent, that the buyers’ solicitors wrote to the sellers’ solicitors that the buyers were not satisfied with the building inspection report they had received. However, the buyers would proceed with the purchase if the sellers reduced the sale price by $4,000.

    In discussion with their solicitor, the sellers were told they had to either accept the price reduction or the buyers would pull out. Were there any other options, they asked. No, they were told. In great distress the sellers rang me. I suggested they might consider offering to meet the buyers half way with a $2,000 reduction. Why wouldn’t our solicitor have suggested this, they asked. I had no answer. Anyhow the buyers gave their solicitor that instruction and, lo and behold, within 2 hours the buyers had accepted the counter-offer.

    Perhaps there is a need, Tim, to educate a few solicitors as well as agents.

    Apart from this solicitor-caused hitch in the course of the above sale, there was another right at the beginning. The buyers had proposed, prior to going to contract on the property, that they would pay a $10,000 deposit. Not the ideal 10%, but still an amount not to be sneezed at.

    I faxed a copy of the draft contract to the buyers’ solicitor before signing, and it came back with a request the deposit amount be changed to $2000. When queried, the buyers’ solicitor simply said that the buyers did not need to pay such a “substantial” deposit. Would you believe, the contract price was $370,000?”

  • http:// says:

    yes i agree with all above and feel that the property market needs an immediate revamp this will ensure that the big sharks are locked away forever

  • mark says:

    What about these disclaimers for beauties by a larger firm of building consultants:-

    ‘We do not got on the pitched / We inspect roof space from hatch / We inspect sub-floor from sub-floor door’

Leave a Reply

Your email address will not be published. Required fields are marked *

Please prove you\'re a human by completing this equation: * Time limit is exhausted. Please reload CAPTCHA.