The Importance of a Final Inspections Before Settlement

The final inspection before settlement is also called a pre-settlement property inspection and is extremely important. The final inspection is a purchaser’s final chance to check the condition of the house before settlement is effected. Settlement is when the purchaser provides the vendor with final payment for property in exchange for the title deeds to the land.

You should complete your final inspection of the property as close to settlement as possible ie. the morning of or the afternoon before settlement.

Purchasers should not take the final inspection before settlement lightly. It is the only opportunity for the purchaser to check whether the property is in the same condition, as it was when the contract was signed and dated, called exchange of Contracts.

Why Should You Attend the Final Inspection Before Settlement?

The settlement period is usually around 42 days after the vendor and purchaser have exchanged contracts. During this period of time, it is likely that there were people occupying the property.

During the final inspection before settlement, purchasers should check:

• the condition of the property
• has the house been vacated properly?
• all inclusions listed on the contract are at the property and in working order;
• if all fixtures are in place, and
• has the vendor met all contract obligations dutifully?

What Should I Look Out for During the Final Inspection Before Settlement?

Before you attend the pre-settlement inspection, it is important to be aware of things that you need to look out for. The purchaser will need to pay the costs for repairing the damages if they don’t notice it during inspection. However, you must hold evidence the damage was not there prior to exchange of Contracts.

In this section we provide an outline of all the important things that you need to keep an eye out for during the pre-settlement inspection.

1. Damages

The first and the foremost thing to check for is damages. You need to check if there is any significant damage in the house or property. This can include things like a hole in the wall, broken windowpanes, or damaged kitchen sinks.

   2. Inclusions and exclusions as per contract

Inclusions and exclusions are identified on the front page of the contract. They are items that need to remain in the house, and items that need to be removed from the house respectively.

Inclusions can include things like a stove, range hood, light fittings, clothesline, and built-in wardrobes. Exclusions can include items that the vendor wishes to remove from the property such as a BBQ, relocatable spa, TVs fixed to the wall, and any other specified item list on the Contract.

The inclusions must be checked properly by the purchaser during the pre-settlement inspection.

What Can I Do If I Find Issues During the Inspection?

Purchasers may find some issues or damages with the property during their final inspection. In such circumstances, they must inform the vendor’s agent, and their own solicitor as a matter of urgency. The purchaser’s solicitor will then notify the vendor or their solicitor about the damages that

they have come across.

It is the vendor’s responsibility to repair any damage before settlement. The purchaser’s solicitor can negotiate with the vendor’s solicitor for such repairs or provide compensation. For example, if the vendor is unable to make the necessary repairs before settlement, the purchaser’s solicitor may negotiate an agreement to reduce the sale price. The sale price may be reduced to compensate for the purchaser bearing the costs associated with making repairs.

Accordingly, if a purchaser does not complete a thorough pre-settlement property inspection before settlement, the purchaser will accept the property in its current condition and accordingly bear the costs of any and all repairs at the property.

Liability limited by a scheme approved under Professional Standards Legislation. This newsletter is intended to provide general information. You should obtain professional advice before you undertake any course of action.