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Results of a building inspection

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  • Results of a building inspection

    Hi all

    We've got our first house under offer subject to a building inspection in the New Year. Very exciting!

    We are now thinking about the building inspection and what is done with any issues that are identified.

    Does the purchaser usually present these back to the vendor (through the agent) and the parties seek to get an agreement on what done?

    I'm sure this has happened many times but it is new to us. Can someone share their experience (I.e how you went about either reducing the purchase price to take into account the findings or where the vendor remedied issues before settlement)?

    Thanks in advance

  • #2
    Originally posted by Nectar View Post
    Does the purchaser usually present these back to the vendor (through the agent) and the parties seek to get an agreement on what done?
    Yep that's right.

    Be ready for the vendor to reply "we took the condition of the property into consideration at the price".


    • #3
      Originally posted by Learning View Post
      Yep that's right.

      Be ready for the vendor to reply "we took the condition of the property into consideration at the price".
      you raise an interesting point.

      What happens depends on the wording of the agreement I suppose?

      If the agreement is subject "to Builders report required" then is it for the purchaser to decide if the report is satisfactory?

      the ADLS agreement states;
      10.3 If the purchaser has indicated on the front page of this agreement that a building report is required, this agreement is conditional upon the purchaser obtaining at the purchaser’s cost on or before the tenth working day after the date of this agreement a report on the condition of the buildings and any other improvements on the property that is satisfactory to the purchaser, on the basis of an objective assessment. The report must be prepared in good faith by a suitably-qualified

      building inspector in accordance with accepted principles and methods. Subject to the rights of any tenants of the property, the vendor shall allow the building inspector to inspect the property at all reasonable times upon reasonable notice for the purposes of preparation of the report.

      The building inspector may not carryout any invasive testing in the course of inspection without the vendor's prior written consent.

      If the purchaser avoids this agreement for non-fulfilment of this condition pursuant to subclause 10.8(5), the purchaser must provide the vendor immediately upon request with a copy of the building inspector's report"

      The vendor has the right to see the report but the question remains does the report give the purchaser the right to withdraw and have deposit returned? My understanding is that there would bneed to be a serious defect for the agreement to fail and the vendor has right of repair or adjustement in price
      Is the
      answer in the settlement clauses?

      Can anyone answer this ?


      • #4
        The standard 10.3 can be used easily to get out of an agreement by the purchaser. I prefer to insert a vendor has the right to rectify building clause that supersedes 10.3.

        To your question at the start, The purchaser will identify issues that are a concern for them and either ask for price off or for them to be fixed on or before settlement. Make sure that the matters are not for maintenance issues but serious issues such as foundations, weather tightness etc. Often solicitors will sort this out. If the issues are major then purchaser will get quote to repair and I'd recommend vendor gets a quote to repair as well. Then you negotiate.

        As stated above, the standard 10.3 is easy to get out of and at the end of the day even if you do have a right to rectify clause inserted, a purchaser if having a finance clause, will always get a way out by getting their finance declined and their lawyer will demand any deposit be returned.


        • #5
          We pulled out on a purchase based on a builders report once. The report questioned a terrace less than a meter from the house with a rather weak looking retaining wall. The estimate for a new retaining wall was $10k. The vendors said there was both wrong with the wall but offered $500. We went back and asked from them to provide an engineers report to confirm their story. They refused but upped their offer to $5k. While this was going on we found a better place so we used this failure to agree to cancel the contract.


          • #6
            Thanks. Yea We are on the look out for issues around the roof, pilig, plumbing, wiring, and cladding given it is an older property


            • #7
              With an older property, expect there to be many small things wrong. If there's anything major, you can raise this with the vendor and hope for a discount (or contribution to the remedial costs) but often as above the vendor has 'already considered the state of the property' in the purchase price.

              If it's a dealbreaker for you, then break the deal. If not, accept it and move on.

              From an accounting perspective, if it's a rental, keep in mind that the cost of repairing many of these issues will be considered capital expenditure, and so will be non-deductible.
              AAT Accounting Services - Property Specialist - [email protected]
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              • #8
                I have missed out on 3 houses cause we got beaten by people not getting a builders report. One of which was my "dream house" man I was sad.

                turns out yeah there was bigger than we thought problems, I quite liked that house and had gotten attached to it, and it was horrible to spend the money on the reports but it was just too much work to be done and too expensive for us so we had to walk away.

                So I was very glad we got a builders report and I am not going to go without one!
                Last edited by SleepySlug; 29-12-2016, 03:19 AM.


                • #9
                  Hi all

                  We are in need of some advice.

                  Our builder has identified (like us) that the floors are quite uneven in the original part of the home - dropping into the corners. The sub-floor access is limited and he wasn't possible to check the piles properly. In one of the corners the builder could see a totara pile that was rotted-out and then a concrete pile sitting beside it - so it looks like the property has been repiled at some point in time. However, the floors are still uneven. We checked the LIM and the council file which didn't provide anymore information.

                  We are very new to this and unsure whether this is a significant issue or not? I'm thinking that we should get a second opinion from a specialist but I'm not sure if that is the done thing and then if some re-leveling/re-piling is required how to should we address that with the vendor?

                  Thanks in advance


                  • #10
                    Hi, is very common for totara piles to be rotting now. It would be a rough piling contractor that doesn't remove old rotten piles when they re pile so i would be assuming quick/temporary fix. piling costs vary hugely depending on m2 access and location. 20k would be a baseline. If you want the full picture i suggest paying a reputable piling contractor to view or negotiate with vendor and take the gamble


                    • #11
                      I don't like building reports. I think ideally you'd know enough to check things out yourself, failing that have a builder you trust to come check it out, then put in a clean offer.

                      Sellers see the builders report clause in the S and P, and even if they don't know of any problems they think the worse, or remember seeing a spot of mould once and be paranoid it's something bad having no knowledge themselves... So a clean offer is often 10 even 30k better than an offer from someone who you can just tell is a nervous buyer likely to make a big deal out of a builders report that can vary massively depending on who looks through, so risks all around. Meanwhile their cash buyers gone and the properties gone semi stale on the market with everyone thinking there's something wrong with it just because you let one picky buyer try screw you down on the price with a pedantic builders report..
                      Last edited by marklowes; 09-01-2017, 08:27 PM.


                      • #12
                        Ideally you will want to rectify any issues because the vendor would pay the bare minimum. So work out costs and adjust your offer.
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