Inspection prior to settlement, also commonly referred to as a pre-settlement inspection is carried out before settlement is finalised. The inspection prior to settlement gives you an opportunity to thoroughly check if all conditions of the contract have been met.
The aim of this article is to discuss relevant matters related to inspection prior to settlement. These include things like when the inspection should be carried out, what are the things that need to be checked during the inspection, and what actions you can take in cases where you find something is not up to the mark.
Settlement or settlement day is the contractually agreed day on which the property settlement is set to be finalised. Ownership of property changes on settlement day from seller or vendor, to the buyer or purchaser.
The inspection prior to settlement is therefore of utmost importance for the purchaser to identify any issues which need to be rectified. After settlement takes places, since the buyer becomes the owner, it will be solely his/her responsibility to fix these issues, which will undoubtedly cost more money.
When Should You Complete The Inspection Prior To Settlement Of Property?
Ideally, a pre-settlement inspection should be completed a couple of weeks before settlement day. Each state’s legislation says that buyers are entitled to complete the inspection a “reasonable time” before settlement day.
It is advisable to complete the inspection several days before settlement day – 10-14 days – so that the seller has ample amount of time to make all necessary repairs, fixes or changes. Generally the time period during which the contracts are exchanged to the day settlement is finalised can last anywhere between 30 to 90 days.
Naturally, the condition of property will not be the same as when the contracts were first exchanged. This is the primary reason why pre-settlement inspections are of utmost importance. Secondly, this is also why the inspection is conducted a week or two before settlement day.
Doing the inspection too early will be pointless since the property conditions can once again change if there are new damages. Similarly, conducting the inspection too close to the settlement day would mean that the vendor will not be given sufficient time to fix the issues.
Inspection Prior To Settlement: What To Check?
This section provides a guide on what to check while completing the pre-settlement inspection. Mainly there is a need to check if all special conditions have been met, to identify any significant damages, to ensure general cleanliness in the place and to check if it’s tidy, and inclusions and exclusions.
What are exclusions and inclusions?
While exchanging contracts, often people make agreements on what things should be left in the property (known as inclusions) and what items need to be removed from the property before possession by purchaser (known as exclusions).
Inclusions could be some specific furniture, or appliances and similarly, exclusions can be furniture, electronic gadgets like televisions, or rugs etc.
Importantly, to be able to cross check and identify if all inclusions and exclusions have been kept and removed respectively, it is advisable to carry the contract of sale with you during the inspection prior to settlement.
According to Section 52A of the Conveyancing Act 1919 (NSW), the contract of sale must also include draining diagrams, property certificate etc.
Tidy and clean
The house should be well-kept and clean. If there’s waste lying around, people will naturally be put off. Any stains on carpets, or marks on the wall should be cleaned up. If you find an issue such as a stain on the rug, you will need to raise the point with the vendor, or your conveyancer.
This could include broken windows, broken locks at the main door, mould in the walls etc. Additionally, you also need to look for damages in other items such as:
- Electronic appliances;
- Water heaters, air conditioners, heaters;
- Lightings in all the rooms;
- Curtains and blinds;
- Smoke alarms;
- Pest issues
When contracts were being exchanged, if there were any special conditions included in them, you need to check if they’ve been met.
For instance, in the first inspection before contract exchange if you found that a window was broken and if there was a special entry made about repairing the broken window in the contract, this needs to be taken care of by the time the inspection prior to settlement takes place.
What To Do If You Find Issues?
As mentioned above, the main purpose of the inspection prior to settlement is to identify issues and let the vendor know about the same so they can make necessary fixes.
If you come across certain issues, you will need to raise this concern with your solicitor, or conveyancer. They can then speak with the vendor and the vendor’s solicitor to negotiate the issue as a special condition in the contract which needs to be fixed.
Once this is done the purchaser will be allowed to organise another inspection where they can check whether or not the repairs have been made. If the issues are still there, the vendors may offer a price reduction to compensate for the payments the purchaser may have to make to repair damages.
Seek Legal Guidance From Conveyancers At JB Solicitors
Buying a new property is a great achievement for all. It is a significant milestone in people’s lives, and especially so for first-time property buyers. It is therefore important for all to be able to check the condition of the property thoroughly.
At JB Solicitors, our expert solicitors will be by your side and give you legal guidance, and help you with all matters including contract exchange, raising concerns with the vendors and finally the settlement.
Our conveyancing team is well-equipped to provide you with market-leading advice in all matters related to purchasing or selling property. We also offer fixed-fee pricing for property and conveyancing matters to give you a clear sense of your legal costs from the get-go.
Contact our friendly and experienced solicitors today.