Pre settlement inspection – what is it and why is it necessary?
You’ve had your offer accepted or been the successful bidder at auction. You’ve exchanged contracts, the usual 6 week settlement period is almost up and you’re almost ready to move into your new home, or find a fabulous tenant. There’s one last thing that you need to do before instructing your conveyancer or solicitor to proceed to settlement. You need to arrange a pre settlement inspection with the selling agent as close to settlement day as possible and ideally when the premises are vacant.
What is a pre settlement inspection?
A pre settlement inspection is your legal right to inspect the property you have purchased before settlement. You are entitled to one inspection.
This inspection is to ensure you are happy that the property is in the same condition as when you exchanged contracts. Wherever possible we conduct a pre settlement inspection for our clients after the vendor or tenant has moved out and the property is at handover stage.
Why do you need a pre settlement inspection?
This is your final opportunity to inspect the property to ensure everything is in order and that nothing has been damaged or removed. It is too late once you have settled to make a claim from the vendor.
What should you check at your inspection?
- Check there has been no damage to the property between exchange of contracts and settlement
Walk through every room and ensure you are happy that everything is in the same condition as when purchased.
- Inclusions and exclusions
Ensure that all inclusions listed on the contract have been left on the premises, and that exclusions have been removed
- Check instructions and warranties for fixtures or equipment have been left on the premises
- Keys, remote controls and other devices
Physically check that the correct keys have been provided and remote controls for garage doors and other fixtures have been left behind
- Special conditions
Check any special repairs or changes requested in the contract have been completed
Although it is not a legal requirement to leave a property in a clean state, it is definitely a moral responsibility. Ensure that no unwanted items have been left behind either inside or outside
Is a pre settlement inspection necessary?
In one word – YES!
What can go wrong?
We have conducted hundreds of pre settlement inspections for clients over the last 23 years. The vast majority of times, the process is quick and issue free. Sometimes however this is not the case.
Any of the above (from the checklist “What should you check at your inspection?”) can go wrong, but the most common issue we encounter involves discrepancies regarding what is considered clean and tidy. Everyone’s ideas of what is considered clean is different and this can cause angst at the pre settlement inspection.
A recent pre settlement inspection conducted for clients demonstrates one good example of what can go wrong.
The vendors had vacated the property and left it in what we considered was an unacceptable condition. The kitchen benches had not even been wiped down. Cupboards had not been cleaned, the outdoor areas were left untidy and rubbish had not been removed.
What can be done if things are not as they should be?
It is important to discuss any issues with the selling agent or vendor at the pre settlement inspection. Try to establish what can be done to rectify these issues to your satisfaction on the spot. Solutions include having the vendor pay for cleaning or rubbish removal to be done, or adjusting the settlement funds to reflect the costs to repair any damages.
In the example above, after a couple of hours of negotiation with the agent, vendors and solicitors we reached an agreement. The vendors agreed to pay for cleaners and the property was spotless when our clients moved in.
Buying a home or investment property is a significant financial and emotional investment. Our clients can always be assured that there will be no nasty surprises or disappointments when it is time to move in.