Under general law a Seller of land is under no obligation to disclose to a Buyer any defects in the structures on the land. Further, there is no requirement that the Seller has to disclose whether or not the structures on the property have been built with Council approval. It is, therefore, always recommended that you satisfy yourself in relation to the condition and legality of the structures on the land before signing a Contract or bidding at an auction. You will typically have no right to make any claim for compensation if any defects or illegality are discovered after you become bound to the Contract.
You should discuss with your Solicitor and carefully consider whether the following forms of Pre-Purchase Inspections are required:
Building Inspection Reports
Pre-Purchase Building Inspection Reports are prepared by Building Inspectors and can help you assess the quality and condition of the building and other structures on the land and identify minor or major defects or damage, if any. These reports will generally comment on all areas and aspects of the building that are reasonably capable of being inspected. If you wish to be present during the inspection let your Solicitor know so that this can be arranged with the Inspector.
Most Building Inspectors are not qualified to give advice in relation to structural defects. If the Building Inspector considers that there may be structural defects they will typically recommend that you obtain a report from a Structural Engineer, for example, if there are potential issues with piering, structural walls or retaining walls.
If your Pre-Purchase Building Inspection Report identifies significant defects or damage you may wish to reconsider purchasing the property or attempt to renegotiate the price. However, keep in mind, that nearly all properties have minor defects of some nature which defects may not make any difference to the market value of the property.
If you have a family friend or relative who you intend to use to provide you with an opinion about the condition of the property please keep in mind that one of the key purposes of obtaining formal Pre-Purchase Building Inspection Report is to:
- identify any defects that may influence your decision to purchase the property or the price you are prepared to pay, and
- to ensure that there is a third party with appropriate professional indemnity insurance against whom you can bring a claim for compensation if that person (the Building Inspector) has negligently failed to identify any defect in relation to the property which would have influenced your decision in relation to the property or price you were willing to pay.
If inspections are carried out by a family friend or relative they will typically be uninsured and/or you may find it difficult to sue that person to recover losses if they fail to identify defects that would have otherwise been discovered.
If you intend to engage your own Inspectors to perform appropriate Pre-Purchase Inspections you should ensure that they maintain adequate professional indemnity insurance.
Pest Inspection Reports
Pest Inspection Reports identify whether the building suffers or has suffered from any pest infestation or related damage. Most pest inspections will include information on termites, borer beetles, wood decay, environmental conditions that are conducive to timber pests, drainage, ventilation as well as the presence of non-structural pests such as cockroaches, ants, rats and mice.
Electrical Safety Audit Reports
An Electrical Safety Audit Report will determine whether the property you intend to purchase requires any major rewiring or safety upgrades and whether there are any existing electrical dangers that could potentially result in fires or personal injury. The costs of rewiring a property could be a significant and may influence the price you are willing to pay for a property.
We typically recommend that Buyers obtain an Electrical Safety Audit Report if the property is over 50 years old or if there appears to be any unauthorised improvements to the property.
Strata/Community Scheme Inspection Reports
If the property is part of a Strata or Community Scheme (for example, a unit or property in a new estate) it is recommended that Buyers obtain a Strata/Community Scheme Inspection Report. Strata/Community Scheme Inspection Reports will identify and detail specific information pertaining to the Strata Scheme for the property including management, maintenance, repairs, levies, insurances, by-laws and other information that will be of assistance to you.
Owners of strata properties are required to contribute to costs associated with the Common Property, including:
- Compensation to persons who may have been injured on the Common Property, or
- Rectification works.
These hidden costs may not be apparent without a report by an experienced Strata Property Manager.
Identification Survey Reports
An Identification Survey Report will identify the location of the building on the subject land and should be obtained unless a satisfactory Survey Report is available from the Seller or you are satisfied that no structure on the land could possibly be over a boundary. Survey Reports will help to ensure that the buildings you are purchasing are contained wholly within the boundaries of the land you are buying and that no adjoining structures encroach onto the land.
If there is any doubt about whether a structure may encroach on a boundary a Survey Report should be obtained as an owner of adjoining land affected by an encroachment can insist that the part of the building that encroaches be moved. This is obviously easier said than done, hence Survey Reports can avoid substantial expenses that might arise if part of the building encroaches onto an adjoining owners land.
Survey Reports will also identify the proximity of eaves to boundaries (which would also constitute an encroachment) as well as the location of Easements, Rights of Way and the like that may affect the property.
Council Building Information Certificates
If it appears that the whole or any part of the property may have been constructed without Council approval you should carefully consider obtaining a Council Building Information Certificate in relation to the property. Regardless of who may have performed the work, if unauthorised works have been performed Council may issue an order requiring that the building be repaired, demolished, altered, added to or rebuilt.
Council Building Information Certificates are issued if Council is requested to inspect the property and certifies that the improvements comply with a Council Development Approval. If Council discovers that approval was not obtained for any improvement it will issue a Council Building Information Certificate if there is no matter discernible by the exercise of reasonable care and skill that would entitle the Council to:
- order that the building be demolished, altered, added to or rebuilt,
- take proceedings for an order or injunction requiring the building to be demolished, altered, added to or rebuilt,
- take proceedings in relation to any encroachment by the building onto land vested in or under the control of the Council, or
- there is such a matter but, in the circumstances, the Council does not propose to make any such order or take any such proceedings.
A Council Building Information Certificate, therefore, operates to prevent Council from:
- making an order (and taking proceedings for the making of an order or injunction) requiring the building to be repaired, demolished, altered, added to or rebuilt, and
- taking proceedings in relation to any encroachment by the building on to land vested in or under the control of the Council,
in relation to matters:
- existing or occurring before the date of issue of the Certificate, or
- arising only from the deterioration of the building as a result solely of fair wear and tear for a period of seven (7) years.
Structural Engineer’s Report
Without limitation, a Structural Engineer’s Report should be obtained if recommended in a Building Inspect Report or if you intend to carry out renovations to the property. The Report should evaluate areas such as walls, roof, frames, concrete, retaining walls etc and comment on defects, the likely cause of the defects and recommendations in relation to how to eliminate or fix any problems.