A recent settlement case has highlighted the need for agents to understand the implications of ‘structural inspection clauses’, particularly, what it addresses and what it doesn’t.  

This was clearly demonstrated when a rookie agent incorrectly advised a buyer that some maintenance issues at a property would be covered by a structural inspection clause, potentially causing a dispute and exposing the buyer to hundreds of dollars in additional maintenance costs.

In this instance, the buyer, Ms Woodhams, (not her real name) was purchasing a 1960s ex-rental. It appeared structurally sound but had a couple of obvious maintenance issues which she wanted repaired prior to settlement.

The buyer elected to include a pre-purchase structural inspection clause on the O&A and asked the agent to also include a clause requiring the seller to rectify the maintenance issues. However, the agent advised her that this was not necessary as “these would be addressed and covered under the Structural Inspection Clause.”

Trusting this advice, the buyer opted to leave the additional clause off the O&A.

As expected, the structural report stated that the home was structurally sound. It also noted the repairs identified by the buyer but determined these were maintenance items, and did not affect the structural integrity of the property. As a result Seller was under no obligation to fix them.

Disappointed with this outcome, the buyer contacted the agent to discuss how the situation could be rectified.  Fortunately, a resolution was reached when the seller agreed to pick up the cost for the most expensive maintenance issue and the buyer agreed to deal with the rest.

The take home from this story?

  1. Ensure buyers understand what’s included and excluded in a pre-purchase structural inspection.
  2. Ensure the building inspection clause reflects the will of the party seeking its benefit.
  3. Ensure the inspection clause requires the inspection be completed in accordance with the relevant Australian Standard.
  4. Ensure the clause limits who can perform the report to those qualified to do so.
  5. Ensure the buyers understand that they are not entitled to be present during the inspection, unless they have the seller’s express consent.

If you have any questions relating to the structural inspection clause, please feel free to contact us on 94490044. We’re happy to help.

About the Author

Peter Fletcher

Peter began his real estate career in 1985 selling tin shacks and red dirt in Kalgoorlie. Moving to Perth in 1989 he quickly moved into agency ownership. By 2006, Peter had built a thriving agency managing over 600 rental properties. He then sold the business, taking time out of the industry to complete Honours in a Bachelor of Arts. Peter is now the Managing Director of Residential Settlements in Burswood and an active Army reservist. Peter has had just one hot shower since the 10th of May 2008.