If you hire a building inspector to inspect a building there is a good chance that the report will come back with at least one defect or one item that isn’t up to scratch.

The options that you have depend on the type of contract you have entered into.

Contract Terms

When you purchase a property you enter into a contract with the seller. This contract will have terms; terms which are agreed upon by yourself and the vendor. Most real estate contracts are conditional, which means there are conditions that need to be met before the deal is final. The most common conditions are finance and building and pest inspections. This means that if the building fails a building inspection then you can cancel the contract without penalty. The tricky bit is, what constitutes a failed building inspection? Unfortunately the answer to that varies.

Conditional

If you are entering a conditional contract, ensure that you read the terms and conditions carefully. Contracts may vary and you need to make sure that what you consider an unsatisfactory building inspection report is what is stated in the contract. If you are selling a property then you also need to make sure that the contract suits your needs.

What if the report picks up defects?

• your options will depend on the severity of the defect. A contract will only be able to be cancelled if it is a serious defect.
• if it is a minor defect then the vendor may be given the opportunity to fix the problem so the sale can be completed.
• major defects may be able to be rectified by the vendor to let the sale continue as planned. Major defect may need a contract period extension.
• you may be given the option to renegotiate the sale price to accommodate the defect and its subsequent effects. Just remember to get quotes before renegotiating.
• if a defect is serious enough you may have the option to cancel the sale contract.

Legal Advice

If you are in a situation where you think you may be able to withdraw from a contract, you should seek out legal advice ASAP. Contracts are legal documents and in a situation where uncertainty exists seek out a legal professional.

Defects

Most defects can be fixed but some can’t and it’s these that may lead to the cancellation of your contract. When reading your building inspection report look for issues with the building’s foundations or the property’s drainage. On a pest report you should be look carefully at issues that involve infestation of the building’s structure as these can be fatal to the building.

When you arrange for a building inspection, make sure you speak to the inspector about any of concerns that you have and be clear about what you want inspected. Not all building inspections include all structures such as sheds and garages, and some don’t include external fixtures such as fences or pathways.