When purchasing a home in Queensland, the standard Law Society Contract for House and Residential Land hold several consumer protections. One, in particular, is the Building and Pest clause.
This basically allows the Buyer to place an offer on a home and secure a contract knowing if a fault in the building becomes apparent during a check by a building and pest specialist, they can exit the contract without penalty or without jeopardising their deposit. Of course, this doesn’t apply to Auctions as they are unconditional sales and so there is no building and pest clause protection if you purchase under auction conditions.
Clause 4.1 of the sixteenth edition of the Contract noted, states in part:
Building & pest Inspection. (1) This Contract is conditional upon the Buyer obtaining a written Building Report from a licence Building Inspector and a written Pest Report from a licenced Pest Inspector, on the property by the Inspection Date on terms satisfactory to the Buyer.
There a few points to note from this.
The Building & Pest Inspectors (whether one and the same or sperate) need to be licenced. If you engage someone who is not licenced (including friends or relatives), they do not comply with this clause. If an issue is discovered, you may not be able to exit the Contract without default. Getting Dad to kick the tyres, just won’t help you here, sorry.
‘Terms satisfactory to the Buyer’
Secondly, the clause notes ‘terms satisfactory to the Buyer’, satisfactory being the keyword. This is why when people ask if the building and pest passed, there is no pass or fail. It is a matter of the Buyer being satisfied.
This is why you can buy a house missing a roof, or no windows or in bad condition. If the Buyer accepts the home as-is, then they are considered satisfied and the clause satisfied too. Of course, there may be legal requirements on the Buyer to remedy certain issues once they purchase the home, but again that is up to them.
As a Buyer, your responsibility is to take in as much as you can about the home. Have a good look, what condition are the fences? Are there signs of water damage showing on the ceiling? You aren’t expected to be a Building or pest expert, but you can’t reasonably state you are unsatisfied with an element of the home that was clear to be seen. You must act reasonably. And remember, this clause is a consumer protection, not a negotiation tool.
If something comes up that is significant, and you still want to proceed, you can, of course, discuss this with the Seller. If the Seller hasn’t made you aware of the issue prior to offering, they assumable were not aware of it themselves. Hence this new information has a bearing on what you would have offered as a Buyer is you were made aware. It is reasonable to see if all parties can come to an agreeable resolution.
Please note, there are other conditions relating to the building and pest which need to be understood. You should always consider the full clause in its entirety and as always, seek legal opinion from your friendly legal professional if you are unsure with any aspect of the Contract.
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Written by Shawn Kristofer