Pre-settlement inspections, as opposed to pre-purchase inspections, are to make sure the property is in the same condition as when contracts were exchanged. It is the purchaser’s final chance to check a property before taking possession of it and ensure there hasn’t been any damage, the special conditions of the contract have been fulfilled and that it is in generally in a good condition.
What is a pre-settlement inspection and do you need one?
Undertaken in the days leading up to settlement this is when the new owner(s) tour a purchased property to ensure it’s in the same condition as when the contract was signed.
This is especially important if the property hasn’t been vacant since purchase as it may be possible that there is additional damage or wear and tear. Anything above what may be reasonable should be communicated with the real estate agent before the settlement.
Settlement periods can be anywhere between 14 and 120 days and the condition of the property can change drastically in that time if it hasn’t been vacant since purchase. Most settlement periods are 30 to 60 days but if you’re unsure of yours, make sure you check in with your conveyancer.
This inspection is to make sure that the property is in the same condition as when contracts were exchanged, not better and not worse. This also means that buyers cannot demand that repairs are made on things that were broken during the first inspection.
If, however, the property is in a worse condition than when contracts were exchanged – for example, if there’s a new hole in the wall, broken window or burst water pipe – you can ask the vendor to make repairs accordingly.
If the vendor is doing a simultaneous settlement, they may be in the process of moving out, so buyers should not expect the property to be completely empty.
When should you do a pre-settlement inspection?
It’s best to do this inspection close to when keys are handed over but with enough time (at least a few days) to allow for repairs, if necessary, as it may take time for the necessary work to be done. Usually 5 days is the recommended timeframe.
Who can inspect the property?
Buyers should undertake the inspection themselves along with a witness, such as the real estate agent, and organise the visit in advance at a time that suits the vendor. It’s not legal to turn up without notice and demand entry to a premise that’s not yet theirs.
Things to check for during a pre-settlement inspection include:
Lights and electronics
Test each room’s light switch to ensure it’s working. If it doesn’t then be sure to follow up with the vendor to ask why.
Electronics that are attached to the house, such as CCTV, in-room speakers etc should be tested also.
Anything that’s not attached, such as TVs and un-attached speakers, will be moved out before settlement.
Turn on each tap and check that it’s operating as it was when contracts were exchanged.
Be sure that drains are clear and running free, if that’s how they were previously.
Test the water heater by making sure the hot taps and shower(s) are working normally.
Air conditioners and heaters
Be sure that each heater and air conditioner is functioning and has a working remote, if required.
Door handles and locks
Open and close each door to ensure they’re in working order.
Exterior door locks should also be functional if they were previously.
Appliances such as stoves and dishwashers come as part of the sale as they’re considered fixed to the premises.
Other appliances such as fridges, toasters and coffee machines are generally taken away by the vendor on moving day.
Ensure anything that’s staying is working as expected.
Curtains and blinds
Blinds and curtains are considered part of the sale so make sure they’re working as expected.
If they’re dirty or damaged (and they weren’t previously) then you can request them to be cleaned.
Windows and glass
Ensure all windows and glass aren’t newly broken or cracked and that windows that have a lock are working.
Ensure that there are no new stains on the carpets or damage to the flooring such as cracked tiles or holes in floorboards.
The vendor isn’t under any obligation to steam clean the carpets, as some renters are required to do when they leave, but they should be cleaned to a reasonable level.
Pool and spa filters
Another ‘fixed’ item, pool appliances should be in working order if they were previously.
Check for pests
Check for evidence of pests such as mice droppings, possum damage etc.
Ensure the property has adequate smoke alarms and that they’re in working order.
Ensure that all rubbish has been removed including from sheds, under the house and in cupboards and wardrobes.
The property should still be generally clean, tidy and free of additional damage.
If the conveyancer has negotiated special conditions on the buyer’s behalf then you need to be sure that these are met.
These could include removal of sheds, pest and soil inspection reports, ending tenancy agreements, inclusion of specific non-fixed items etc.
If you’re not sure about these then it’s best to speak to your conveyancer.
What to bring to a pre-settlement inspection
While it might be fine to turn up empty handed, depending on the complexity of the purchase agreement, buyers may find it handy to turn up with a few items just in case.
Contract of sale
You should bring the contract of sale with you, so that you can make sure the property contains all the items the vendor agreed to leave (inclusions) and is free from all the items the vendor agreed to take away (exclusions).
Buyers should also come prepared to take photo evidence of anything that needs attention so that they can be formally passed on to the vendor.
What happens if there’s a problem?
If you find something is broken or in a worse condition than it was during the first inspection, you should raise it with your conveyancer immediately.
They will try to negotiate it as a special condition on the contract, which means the vendor must fix it before settlement.
If it cannot be patched up in time, the sale price can be reduced to cover the cost of repairs.
You may be dying to move into your new house, but it’s best to stay clear-headed and carry out a pre-settlement inspection to ensure the property is in the same condition as when you first inspected it.
Do you want to learn more about pre-settlement inspections? Contact us today to speak with one of our experienced local agents who can ensure you understand the process.