Pre-settlement inspection is a crucial step before you move into your new property. This is the final inspection opportunity that one gets before they move into their new property.
A pre-settlement inspection usually takes place a week before settlement day. Settlement day is the contractually agreed day when the sale of the property is finally settled, and completed.
Most importantly, during a pre-settlement inspection, the purchaser needs to check if the house is in the same condition in which it was when the contracts were exchanged.
Importance Of Pre-Settlement Inspection
These inspections provide an opportunity to check if the house is in the agreed-upon condition. Generally, a settlement period can run between 30 to 90 days, after the exchange of contract.
During this period, it is likely that the house will not remain in the same condition, as it was when it was first inspected. This is especially the case when the property has been lived in during the settlement period.
In cases where it is found that the property was not in the same condition, the necessary repairs must be made before the final payment.
In summary, a pre-settlement inspection allows one to ensure that: –
- The property is in the same condition as it was during the first inspection;
- All contract obligations have been met;
- All fittings and fixtures are in working order; and
- The house has been vacated accordingly.
When Should Pre-Settlement Inspection Be Carried Out
In Australia, each state generally has different laws and regulations around pre-settlement inspections. However, it is best to conduct a pre-settlement inspection several days before settlement day. This is because, in case any issues arise, the vendor can be given time to make necessary repairs.
It is stated that the inspection can be carried out at a ‘reasonable time” during the week before settlement.
What Does Contract Of Sale Include?
Under Section 52A of Conveyancing Act 1919 (NSW), a contract of sale can include documents like: –
- Property certificate;
- Planning certificate issued by the local council;
- Drainage diagrams; and
- Any dealings related to the property which are to do with easements, or restrictions on the use of land.
Things To Look For During Pre-Settlement Inspection
Purchasers need to inspect carefully to check for any significant damages. For instance, a broken window, a faulty doorbell, or a cupboard that has come off its hinges.
Inclusions and Exclusions.
These are special conditions under the contract that need to be made. In some cases it is specified that some items need to remain in the house – these are called inclusions. For example, the oven, dishwasher, built-in BBQ, curtains and light fittings fall under inclusions.
On the other hand, the contract will specify that some items need to be removed – these are called exclusions.
The purchaser must carry the contract of sale during the pre-settlement inspection so you know what exactly is included and excluded from the sale.
General good condition.
The property should be neat and tidy during inspection. All piles of rubbish and green waste must be discarded. In cases where the property has big pieces of furniture, the agent can confirm with the vendor to ensure that they have been removed before settlement.
If the contract mentions special conditions, for instance if the purchaser asked for a broken door to be fixed and made lockable before contract – it is important to ensure that these conditions have been met.
Other things that the purchaser should thoroughly check: –
- lights and electronics
- water heaters
- air conditioners and heaters
- door handles and locks
- windows and glass
- curtains and glass
- pool and spa filters
- check for pests
- smoke alarms
What To Do If Purchaser Is Not Satisfied After Inspection?
The purchaser has to highlight any issues that they have come across during the inspection, and raise these concerns with their conveyancer or solicitor immediately.
The purchaser’s solicitor may be able to renegotiate the conditions of settlement – for instance, the vendor must fix faults before the day of settlement, or agree to reduce the sale price to take into consideration the money that the purchaser will need to spend for repairs after moving in.
Based on how the first inspection goes, the purchaser may be entitled to organise a second pre-settlement inspection to check if the issues have been dealt with. Where repairs are impossible, the vendor may offer price reductions.
Is it possible to negotiate after pre-settlement inspection, or lower an offer?
In case the problems cannot be fixed, the conveyancer can negotiate the sale price for the purchaser, in order to cover the costs of any repairs.
Can I attend the pre-settlement inspection by myself?
It is advisable that the purchaser attend the inspection along with a witness such as the real estate agent.
Can I do the pre-settlement inspection one day or two days before settlement?
It is highly advisable that the inspection be done several days before settlement to allow the vendor to address any issues that the purchaser may find.
Completing the inspection several days before settlement benefits both the vendor and the purchaser of property.
Importance Of Seeking Legal Advice
It is important to know your rights when completing a pre-settlement inspection. Having an experienced solicitor by your side is essential to know your rights and duties as a purchaser.
We have fixed-fee pricing, and our conveyancing experts have efficient market knowledge, and experience that will help you reach your desired outcomes. We also have a money-back guarantee for conveyancing matters.
Contact our friendly lawyers today to gain market-leading advice on all property matters.