Allowing buyers to do a final inspection more than five business days before settlement can cause problems for you and your vendors.
Final inspections are the buyer’s opportunity to look over the property (accompanied by no more than two other people) to ensure it’s in the same condition as it was when they made their offer, and that any special conditions (such as electrical, plumbing and gas warranties) are satisfied. As a highlighted during a recent settlement case, the timing of this inspection matters.
During this settlement case, the buyers carried out their final inspection over a week before settlement. But a few days later, they requested another inspection so that they could “have a better look at the property”. The sellers initially refused as they were in the process of moving house, but the buyers insisted that they were legally entitled to a final inspection within five days before settlement date.
Indeed, clause 5.1 of the Joint Form of General conditions states that “(1) the Buyer is entitled to inspect the Property; and (2) the Seller must grant access to the Property to enable the Buyer to inspect the Property, on 1 occasion within 5 Business Days before the Settlement Date or the Possession Date.”
Even though the buyers had already done one inspection, it was not within five business days before settlement date, and they were determined to inspect the property again. The sellers were reluctant to let the buyers have another inspection, leaving the real estate agent in an uncomfortable position.
This situation can be easily avoided: insist that inspections are carried out no sooner than five business days before settlement date. Occasionally, an inspection may need to be scheduled sooner – for example, if the buyer is a fly-in-fly-out worker who will be out of town. But by holding final inspections within five business days before settlement date, you can minimise the chance of disputes between your vendor and buyer.
Image by James Fee via Flickr.