Building and pest inspections and what the contract says about them

What a building report covers

A building report is a written account of the condition of the property.

It covers the parts of the property the inspector can reach, such as the interior, the exterior, the roof space, the under-floor space, and site features like retaining walls, fences, paths and drainage.

You can ask for specific checks, such as visible asbestos, smoke alarms or an electrical safety switch.

The report should list any areas that were not inspected and why.

What a building report does not cover

A standard building report does not usually include:

1. Areas the inspector could not reach.
2. An estimate of the cost of repairs.
3. Minor defects.
4. Active termites.
5. Items such as wiring, plumbing, footings, air conditioning and pools.

A building report can show visible termite damage. It does not show whether termites are active. That needs a pest inspection.

Loose-fill asbestos cannot be identified by sight. Only a licensed asbestos assessor can confirm it by testing.

Units and strata

For a unit, the inspector normally looks only at the inside of the unit and its immediate exterior.

The common property needs a separate, special-purpose report.

The strata records or strata report show defects and planned works for the whole building. Read them with the inspection report.

Timing and the cooling-off period

The NSW Government suggests asking the seller for permission to inspect as early as possible.

Inspectors usually need 2 to 3 days' notice.

There are three points in time to consider:

1. Before exchange. You can decide whether to buy, or ask for a lower price, before you are bound.
2. During the cooling-off period. If the report is bad, you can withdraw by written notice before 5pm on the fifth business day. You forfeit 0.25% of the price.
3. After the cooling-off period. You are bound. A bad report does not by itself let you withdraw.

At auction there is no cooling-off period, so the report must be done before you bid.

What the contract says

The contract decides what rights you have about the condition of the property after exchange.

A buyer can ask the seller to add a condition that lets the buyer withdraw, or ask for repairs, if a report finds a problem. Whether the seller agrees is a matter for negotiation before exchange.

If no such condition is in the contract, do not assume you have one.

Read the special conditions with your solicitor, so you know exactly what rights the contract gives you.

Earlier reports and seller reports

When you ask for a copy of the contract, the agent must tell you about earlier inspection reports it knows of.

You may be able to buy an earlier report.

A seller may give you its own building report. It is not a substitute for a report you commission yourself.

Swimming pools

Check the pool fencing and the pool certificate attached to the contract.

Unless the seller fixes any problems and obtains a certificate of compliance before settlement, the buyer usually becomes responsible for fixing them, generally within 90 days after settlement.

Where buyers get caught

Waiting until the cooling-off period has nearly ended.

A report that arrives late is of little use if you are already bound.

Relying on the seller's report.

It was commissioned for the seller. Get your own.

Assuming the report covers everything.

Read the list of areas not inspected and the exclusions.

Giving a 66W certificate before the report is done.

Once you waive, you cannot withdraw because of a bad report.

Common questions