A recent experience with live termites has highlighted the importance of making timber pest clauses crystal clear.
Under the terms of the Offer and Acceptance, a real estate contract was conditional upon a timber pest inspection report being obtained by the buyer.
The timber pest inspection clause stated that “If the report discloses live timber pests or structural damage to the main dwelling … and the Seller at his/her own expense is unable to eradicate, remedy or rectify such pest activity or structural damage, the Buyer may at any time within 5 working days of the date of such report, given in writing, terminate the Contract…”
The problem? The clause did not specify a timeframe in which the timber pest inspection report must be obtained. As such, the buyer felt no urgency to complete the report, and despite a reminder from us, didn’t have the report done until the day before settlement.
During the inspection, the inspector found live termites in the building – much to the surprise of the seller!
As per the contract, the buyer was entitled to have the termite problem rectified. But with settlement less than 24 hours away, the seller was unable to arrange for the exterminator to eradicate the infestation in time, and settlement was delayed.
In this case, the termites were eradicated a few days later and settlement occurred on the same day – but the delay was an inconvenience to both buyer and seller.
Had the timber pest inspection clause specified a timeframe in which the report had to be obtained, the termites would have been discovered with plenty of time to spare, and eradication could have been arranged before settlement date.
To avoid delays like this one, ensure your clauses are specific by using your office’s standard clauses wherever possible. Well-written contracts are the best way to ensure settlement occurs on time and hassle-free.