Pre-settlement inspection rights refer to the rights of the property purchaser to view the property before settlement occurs.
If you are about to purchase a property, you may be wondering if you have any pre-settlement inspection rights. What can you do if you find issues with a property before settlement? This is an important discussion under pre settlement inspection rights.
The following article is a must-read for anyone considering purchasing a property in Australia. Read on to find what you need to know before taking the plunge and committing to a property.
What are Pre Settlement Inspections Rights?
Before discussing what pre-settlement inspection rights are, it would be helpful to discuss what pre-settlement inspections involve. Pre-settlement inspections in Australia, more commonly known as final inspections, are relatively routine before a property settlement.
In the typical case, a purchaser will have the right to a single pre-settlement inspection within three days before settlement. This pre-settlement, although not compulsory, is highly important as it can reveal circumstances about the property. These circumstances can potentially add dramatic costs to make the property liveable or fit for the purpose in which you intend to make use of the property or land.
Why Should You Use Your Pre Settlement Inspection Rights?
As a purchaser of a property, you really should exercise your pre-settlement inspection rights before settlement. This is because a pre-settlement inspection allows the buyer to do a final review of the home. This ensures that the property is in line with expectations according to prior inspections before exchanging contracts.
You may be wondering, what could have changed since the last inspection of the property? The answer to this question is – A LOT!
A common scenario is that the prior owner or occupants have been living in the property between the exchange of the contract of sale and the settlement. Accordingly, you should check that the property is in the same condition as when you signed the contract.
According to Section 52A of the Conveyancing Act 1919 (NSW), a contract of sale should include documents like property certificate, drainage diagrams and information about easements.
Although it is a short period, the persons living there might have damaged valuable fixtures in the home during this time. For example, leakages, a hole in the wall, or broken window panes. Or else, the vendor might have failed to rectify a defect that needed to be fixed before settlement.
A pre-settlement inspection is your final opportunity to inspect the property. You can ensure these issues are rectified before paying the balance of the purchase price.
Importantly, the buyer can check whether if the seller has met contract condition. For example, inclusions and exclusions are an important part of the contract of sale.
Inclusions are items that the seller has promised to keep in the property, such as furniture etc. Exclusions are items that the seller has promised to remove from the house.
How to Do a Pre Settlement Inspection?
To exercise your pre-settlement inspection rights in Australia, you need to organise the inspection within three days prior to settlement. Ideally, you should conduct this final inspection at least 7 days before settlement day.
This is to provide the seller with ample of time in case he/she needs to make repairs before settlement day. It is very important to raise any issues you encounter during your inspection with your solicitor. Your solicitor can then contact the seller’s lawyers to discuss further.
Here are some details you should be looking for:
Any Damage: Have a walkthrough around the property and in the home itself and look for any new damage since the signing of the contract. If you notice any new damage, you should request the vendor to fix the damage before settlement.
Inclusions and Exclusions: During initial exchange of contracts, you would have agreed on what items would be removed from the property and what would remain.
For instance, standard items will usually remain in a property, such as a built-in barbecue, light fittings, or even curtains. However, if any of these items are listed as exclusions in the contract, the vendor is legally allowed to take them.
The best thing to do in your pre-settlement inspection is to take a copy of the contract with you and use it as a checklist to ensure all the inclusions are there.
The Cleanliness of the home: At this stage, the property should be clean and tidy. If previous occupants have left any rubbish or pieces of furniture behind, you should request that the vendor remove these before settlement.
Special Conditions: Check if special conditions have been complied with before settlement. This can include repairs around the home, any renovation work, etc. If not, the purchaser can request the vendor to follow the conditions as part of their pre settlement inspection rights.
What to Do if You Are not Satisfied?
If you have exercised your pre-settlement inspection rights in Australia and found significant issues, you should immediately let your solicitor or conveyancer know.
What your solicitor can do is negotiate with the vendor’s solicitor and reach an outcome that is fair and satisfactory for all parties. Depending on the circumstances, you may be entitled to delay settlement or negotiate for some funds to be withheld at settlement.
Importance of Seeking Legal Advice
When discussing matters such as your pre-settlement inspection rights, it is important to remember that although a pre-settlement is not compulsory, it is highly recommended.
If you have any other property related questions, please do not hesitate to contact our team today. We are always happy to help.
Here at JB Solicitors, we’ll make the process as pain-free as possible. We have fixed-fee pricing for our property law and conveyancing services, giving you a clear sense of the costs from the start. We will be sure to help you out every step of the way.
With years of experience under our belt, we pride ourselves on making each client’s family law experience as positive as possible. If you want more information on your pre-settlement inspection rights, do not hesitate to contact our team.
Contact JB Solicitors today to speak with one of our friendly and experienced property lawyers.
