Pre-Settlement Inspections

You are allowed to do a final inspection of your new home in the week leading up to settlement day. This is to make sure that any special conditions are met and the property is in the same state as when you exchanged contracts.

If a few months have passed since you first exchanged contracts on your home, anything could have happened – particularly if there was someone living in it during that time. A hole in the wall. A new stain on the carpet. A problem with the plumbing.

As the buyer, you have the right to inspect the property before final settlement to make sure that it’s in the same state and condition as it was when you first walked through it. If it’s not, there may be things you can ask the vendor to fix before settlement.

Ideally, you would have already conducted a thorough inspection of the property before you entered into the contract. Your goal at this early stage was to check things like the hot water service, plumbing, electrical, appliances, air conditioning, locks and latches, and even the curtains and blinds. If anything isn’t working, you can have listed it as a special condition on your contract and request that it is fixed before you move in.

The pre-settlement inspection is your final chance to take a look at the property. It’s a good time to check that any special conditions have been met, that rubbish has been removed, and that the property has been maintained.

Try to arrange your pre-settlement inspection about five days before settlement. This way, if anything needs to be fixed – or a new deal needs to be negotiated – there may still be time to do so. If you can arrange it, do this inspection once whoever was living there has moved out.

Who should do the inspection?

In an ideal scenario, you will inspect the property alongside your real estate agent.

If it’s a private sale, you can conduct the pre-settlement inspection with the seller. This could be a good opportunity to get them to show you how things work, if appropriate.

What should you be looking for?

Any significant damage

Walk through the home and around the property, looking for any damage that may have occurred since the contract was signed. For example, if you notice that a window has been broken, then you may be able to request that the window is fixed before settlement. If there’s anything you’re not sure about, you could ask the agent to follow up with the vendor.

Inclusions and exclusions

When you exchanged contracts, you should have agreed on what items were to remain (inclusions) and what were to be removed (exclusions). For example, it’s common for the dishwasher, built-in BBQ and oven to remain – and for the curtains and light fittings to stay where they are. The vendor is generally only allowed to take these types of items if they have been listed as exclusions in the contract. Take the contract of sale with you to the pre-settlement inspection so you know exactly what is included and excluded in the sale.

It’s clean and tidy

By now, the property should be looking clean and tidy. Any piles of rubbish or green waste should have been removed – unless these piles were included in the contract. If there are any big pieces of furniture left, ask the agent to confirm with the vendor that they will be removed before settlement.

Special conditions

As mentioned above, you may have negotiated some special conditions when you entered the contract. For example, a door may have been off its hinges and you added a special condition that the door be fixed and lockable before settlement. If you had any special conditions in your contract, make sure they have been met.

What should you do if you’re not satisfied?

If you walk away from the pre-settlement inspection dissatisfied, then you should let your solicitor or conveyancer know immediately.

They will negotiate with the vendor’s solicitor to reach an outcome that all parties are satisfied with. For example, a problem may have to be fixed before settlement (which may then require another inspection) or the vendor may agree to reduce the sale price to account for repairs that you will do post-settlement.

To sum it up

• A pre-settlement inspection is done about a week before settlement.
• Its aim is to make sure any special conditions have been met, and that the property is in the same state as when the contract was signed.
• You can do the pre-settlement inspection with the agent or the seller.
• Check for significant damage, inclusions and exclusions, plumbing and electrical, cleanliness and special conditions.
• Source: ANZ