Pre-settlement inspection

When you are purchasing a property, the standard Agreement for Sale and Purchase gives you the right to do a pre-purchase inspection before the settlement date.

When should I do my pre-settlement inspection?

The agreement provides that the pre-settlement inspection is to be completed prior to the settlement date.

Ideally you would do the inspection after the vendor (or tenant) has vacated the property.  However, this is not always possible given that often the vendor (or tenant) doesn’t move out of the property until the settlement date.

Depending on when the property is vacated, we would recommend you carry out your inspection either the day before, or a couple of days before the settlement date.

What should I be looking for?

Basically this inspection is to give you the opportunity to check that the property and chattels are in the same condition as when you signed the Agreement for Sale and Purchase.

The vendor is required to leave the floor coverings, window coverings, light fittings, oven and all other chattels listed in your agreement (for example, dishwasher, rangehood, insinkerator, heated towel rails etc) in the property on settlement.  The current Agreement for Sale and Purchase provides that the chattels must be in reasonable working order on settlement.

There have been occasions where a vendor has removed chattels (such as the window coverings or dishwasher) and replaced them with cheaper/older models, so this is another thing to look out for.

If the vendor (or tenant) has vacated the property then you can check to make sure they haven’t damaged the property while moving.  You should check areas where furniture is likely to have been moved around.  For example, any damage to wooden floors from dragging furniture and damage to walls and/or door frames.

If you had agreed that the vendor was to carry out any maintenance or repairs to the property prior to settlement (confirmation of which should be in writing) then this is your opportunity to ensure that these matters have been completed.

In the event of any earthquakes or storms between when you signed the Agreement and settlement, you should also check to ensure that this has not caused any damage to the property.  It may be that you need to seek the advice of your builder.

Unfortunately the standard Agreement for Sale and Purchase does not provide that the property needs to be cleaned prior to settlement.  This is often a bone of contention!  You can however expect the cleanliness of the property to be at the same standard as when you signed the agreement and for the property to be left free of any rubbish.

Mortgagee Sale

Please note that purchasing at a mortgagee sale usually means that the mortgagee gives NO warranty as to the state of the property or any chattels included in the purchase.  Please ensure you seek legal advice BEFORE purchasing at a mortgagee sale.

Has there been any damage since the Agreement for Sale and Purchase was signed?

If the property and/chattels have been damaged (or if any chattels are not in reasonable working order) then you need to tell your legal adviser as soon as possible.

This would not give you the right to cancel the Agreement, however it does “create a right to compensation”.  In some instances the vendor will arrange for the damage to be immediately fixed on the settlement date.  A recent example of this is where the vendor had broken a window while vacating the property.  This was relatively quick and easy for the vendor to sort.  In other cases, the vendor may agree to the purchaser withholding funds (to be held in the solicitor’s trust account) until the work is completed, or even deduct the expected costs from the purchase price.