Pre-settlement Inspection

[bbb]

Hi everyone, this is my first post, although I have been lurking for a while now.

We have bought our first IP and settlement is at the end of the week. Our pre-settlement inspection is tomorrow night and as the vendors will still be in the property, I am worried about how we will be able to make sure it's ok.

Has anyone got any ideas/advice/previous experience about what we should do in this situation?

Many thanks in advance.
bbb

[revdev]

Hi bbb,

Congratulations on your purchase and welcome to the forum.

Personally, I always do a pre-settlement inspection after the house has been vacated. That way you can check chattels against the S & P agreement to make sure all is in order.

G

[bbb]

Thanks for that - the only problem is that our solicitor has advised that we inspect before settlement date so that we can sort problems out before (if there are any).

They vacate the house the day we take over - so it could get a bit messy couldn't it. Are there any ways to say 'yes it seemed ok, but we won't know until they have vacated' ??

[grotto]

Vacating on Settlement day

I've always inspected the house on settlement day, and made a call based on what I see. You can usually tell if they are going to leave the place in good condition, and free of rubbish by lunch time. I don't have to make a decision until 3 p.m., and let the vendor know that I expect all of their packing to be done, and all rubbish removed prior to this. I inspect the house in the morning, and if it looks like it may be a problem, I let the vendor know, which should give them time to rectify things.
As the vendor usually needs the settlement from you in order to complete the settlement on their new house, it puts a lot of pressure on them to pass inspection.
I know people who don't even bother doing a pre-settlement inspection, and most of them have had no problems, but I have heard a couple of horror stories (I once had two truck loads of rubbish left in the yard of a place I bought - vendor said they were coming back to get it and never did).
Good luck anyway

[hawkeye]

My advise is always, always do a pre-settlement inspection. We would have had two or three occasions where we would have been left with quite a bit of expense if we hadn't bothered.

Also if you get someone else to do it on your behalf make sure they understand what the purpose of their inspection is. We once got the Property Manager who was going to look after the place for us to do the inspection as it was in a different city to where we live. During the visit one of the tenants pointed out that there was sewerage coming up a drain. Rather than tell us this, she got it fixed by a plumber at our expense and told us that the Property was fine!!! The Property Management company refused to pay the bill and the vendors solicitor had quite a chuckle at our expense.

At the same property we let the owner off emptying out the Garage where he was storing some 'useful' items as he couldn't find the key to the lock. He eventually found the key, took a couple of things and left the rest of the stuff for us to get rid of!!! None of it was useful.

As others constantly mention on this forum NEVER believe a sob story. Always enforce your rights.

[Fritz]

Re: Pre-settlement Inspection

Has anyone got any ideas/advice/previous experience about what we should do in this situation?
Many thanks in advance.
bbb

Hi bbb,

congratulations on your first IP ! Make sure you celebrate.

Getting vacant posession is crucial. So not only should your question be when to inspect, but also should I settle if it is not vacant.

Picture this: Worst case scenario, you inspect 3 days prior, you settle, owner/tenant does not shift out, place gets trashed. Yes, you may go and get them out eventually, and possibly recover your money, but then again maybe not, and what is your time worth doing all this. You may call this paranoid, but this is a business deal. Close it as smoothly and efficient as possible.

You did not say wether owner/occupied or tenanted.

This is your carrot/stick on settlement to inspect the property when it has been vacated, and then instruct your lawyer to settle. Make sure the keys are with your lawyer in trust or arranged to be exchanged.

And maybe get a new solicitor.

Let us know how it went.

F.

[casacamo]

I do my own inspections - mainly because I have experience
in the building industry.
A structural check can be done with sitting tenants providing you can get
access to underfloor and ceiling areas.

These are some quick tips to look for:

Underfloor - check for signs of water/moisture under bathroom/kitchen
areas. check pipework/drains for leaking joints. check foundations
for signs of undermining/rotten piles/sagging joists etc. Check that
sub floor bracing is fixed securely.

Roof space - check u/side of roofing to see if there is any light coming
through which indicates gaps. Check rafters/purlins for signs of water
marking or sagging/dry rot. Confirm if ceiling insulation is adequate.
Check wiring to see if it needs upgrading.

Exterior - Check spouting for signs of leaking. Look for grass growing
in spouting that will need to be cleared. Look at roof for damaged tiles,
loose ridge cappings, rust marking spots on iron (near laps)
Check windows for peeling paint/dry rot.
Look at drains. where are they located, check for overflowing gully traps etc. which indicate blocked drains.

Hopefully if the vendors are actually living in the house (as opposed to
renters) then they have kept up the maintenance.

Hope this helps.
Casacamo

[fudosan]

Re: Vacating on Settlement day

I've always inspected the house on settlement day, and made a call based on what I see.

Thanks grotto for this piece of advice. I have included in my settlement checklist.

[pixie]

here is a funny story - bought a house with an alarm in it., The vendor set the alarm and refused to give us the code! (It was a divorce). We had to threaten no settlement before they finally handed it over.

I put a clause in the contract saying inspection on day of settlement because the main contract has a fine print clause allowing for an inspection 24 hours earlier which is too early for my liking. RE agents have got quite upset with us in the past wanting to inspect when vacant but prior to paying over the money however I stick to this as it avoids nasty surprises.

I know of a number of people who have bought properties and had many of the chattels (light fittings, drapes, stoves) changed over prior to settlement. I also know it is very common for departing people to leave garbage etc behind, under the house. And finally - check the appliances actually work. You have no real recourse after settlement but all the opportunity in the world later.

For the record - immediately after an offer has been accepted, I quite regularly go back and photograph the drapes and other chattels

My solicitor is excellent - if they haven't vacated properly he holds back a portion of the money.

[Wayne]

There is a limit to what you can refuse to settle over without being default of contract yourself. I have a current situation where the wall oven doesn't work on grill - did when we signed the agreement but doesn't now. We can't refuse settlement on this as we would be in breach of contract - best we can do is try to negotiate a sum prior. I suspect the same would apply if the place was messy etc.

[xris]

This thread goes back a long way now but I thought I’d resurrect it because it sort of interests me.

Final inspection is one of those topics, which attracts a few urban myths. I believe the above comments contain a mixture of good advice and myth.

To add my bit to this dormant thread…

It is wise to do the final inspection as late as possible, preferably the day before settlement. The reasons for this should be obvious. Once you have inspected and agreed that all is in order then you cannot later change your mind. You have no automatic right to a final inspection on settlement day (read the contract all you people out there who are jumping up and down right now and saying: ‘UNTRUE!’) It will be interesting to hear from anyone who has asked – on settlement day morning with no pre-arrangement - for permission to do the final inspection and been told: ‘No, sorry, you’ve foregone your right to do one’.

In some, but only some, cases you can hold back the settlement money. This would be when the vendor fails to settle himself on the terms in the contract. The obvious case is when they do not give vacant possession, such as when they are still shifting out at 4.00pm. But, you cannot hold back funds because the vendor has left an untidy house, has swapped ovens, has not handed over all the keys, has left a pile of full rubbish bags in the front garden. If you hold back funds until they put these wrongs right, then you are in default and liable for late settlement penalties. Your option is to seek a remedy through other means, not by ‘punishing’ the vendor by holding back $1,000 until the vendor ‘behaves himself’. Has anybody been sued for late settlement for doing this? And if so, did you in turn sue your lawyer for not advising you correctly? Or has anyone had it done to them and then sued their lawyer for agreeing to have the purchaser hold back funds - your money - when there was no need to?

I am sure there may be one or two comments from others on all this, especially those who make a habit of using the final inspection as a noose around the neck of the vendor.

Anyway, they are my comments, for what they are worth, and I hope they are of interest.

xris