Pre-settlement Inspections. Yes or No?

Buying a home? Here's our handy guide to pre-settlement inspections.

By Grant Stone

22-06-2021
Obviously, it's entirely up to you whether you elect to carry out a pre-settlement inspection or not. Here are some reasons behind the inspection: A pre-settlement inspection gives the purchaser(s) an opportunity to make sure the property they are in the process of purchasing is in the same condition as when they exchanged contracts, and before the final payment is made. Importantly, the property should be in the same condition as when the contracts were exchanged. Simply speaking, a purchaser is entitled to ensure the pool has not turned green, the floor coverings are still in the property and the vendor/property manager has managed the upkeep of the property. The inspection also serves to reassure the purchaser that any special conditions agreed to and are specified in the contract have been addressed before settlement.

Are pre-settlement inspections necessary?
A settlement period can run anywhere from 30 to 90 days after the exchange of contract. That’s a long time after you last visited the property, it should never be assumed that a property is in the exact same condition as it was when it was first inspected. This is especially true if the property has been lived in for the duration of the settlement period.
There’s nothing worse than turning up to your new property, only to find a hole in the wall, plumbing issues or the home has not been left dirty. A pre-settlement inspection ensures the condition of the property hasn’t changed since signing the contract.

Who arranges a pre-settlement inspection?
Your solicitor/conveyancer/lawyer will firstly bring this to your attention approximately 7 days out from settlement. The inspection itself is generally arranged by the real estate agent selling the property. The agent will need to arrange the inspection with the current owner/owners or if the property is tenanted, will need to issue the appropriate notice (Form 9) to the tenant of the upcoming inspection.

When should this inspection be carried out?
As a general rule, it’s a good idea to conduct the pre-settlement inspection several days out from the settlement. If there are any issues of concern, then the owner can make any necessary repairs required before settlement.

What am I looking for during a pre-settlement inspection?
As a purchaser, it’s not just the walls and floors you need to inspect. It’s also the fixtures, the finishes and even the doorbell (if the property has one) that should be checked. Essentially, you are checking the entire property to ensure the property is up to the standards they were when you signed the contract.
few things to remember:
Electricals - check the switchboard, ceiling fans, lights throughout the property, air conditioners. It’s also a good idea to look at the remote garage door/doors as well as any external gates if applicable.
Appliances - make sure they all work, including every fixed appliance in the kitchen. Turn them all on and off and check that the gas works (if applicable). This includes the dishwasher, oven, stovetop, rangehood, and any other appliances included in the purchase.
Landscaping - make sure the gardens, courtyards, and anything else around the home is in the same condition when you signed the contract.
Fixtures - turn on every tap and make sure they work for both hot and cold water, check the toilets and ensure they flush properly, pop your head under the basins and make sure there are no leaks in the cupboards, and check the washing machine taps.
Window dressings - if applicable.
Doors and windows.
Rubbish bins - check that all the rubbish bins are present at the property.
Any items that were included in the contract, like furniture. Check through the furniture inventory list to ensure everything that you agreed to is in fact in the property.
Other items to inspect include the hot water system, pool pump (if applicable)

How long to allow for the inspection?
Normally a pre purchase inspection can take approximately 30 minutes. Obviously, this will vary from property to property, size, and attributes a property has. In an ideal world, the pre-settlement inspection should be done alongside your real estate agent. If the sale was a private sale, pre-settlement inspections can be arranged between vendor and purchaser. If this is the case, it can be a good opportunity for the purchaser to ask the vendor practical questions such as how the air conditioning works.

What happens if i find something wrong at the property?
Don’t worry, most of the time the issues are easily resolved. If there is a problem, it’s important you seek the advice of your solicitor/conveyancer/lawyer immediately.

Is it possible to re-negotiate after a pre-settlement inspection?
Yes, our conveyancer/solicitor/lawyer can renegotiate on your behalf. This is in order to recover the cost of any necessary repairs to the property. This will not include any general wear and tear and is normally not done through the real estate agent.

How many pre-settlement inspections can a purchaser have?
Only one pre-settlement inspection can normally take place. If there are any problems identified that need to be rectified, the purchasers are allowed one further inspection to ensure the matter has been dealt with accordingly before settlement.

DISCLAIMER - The information provided is for guidance and informational purposes only and does not replace independent business, legal and financial advice which we strongly recommend. Whilst the information is considered true and correct at the date of publication, changes in circumstances after the time of publication may impact the accuracy of the information provided. LJ Hooker will not accept responsibility or liability for any reliance on the blog information, including but not limited to, the accuracy, currency or completeness of any information or links.