1. What are we talking about?
Many WA residential property purchases are subject to Pre Purchase Building Inspections. To incorporate the Building Inspection requirement into the Standard Real Estate Institute of WA (“REIWA”) Offer to Purchase contract, an Annexure is usually added which describes the Pre Purchase Building Inspection requirements. The most often used Annexure by Agents is REIWA’s Pre Purchase Building Inspection Annexure.
The key statement within the REIWA Annexure broadly reads: “The Buyer may at their expense obtain a written Report on any Major Structural Defects of the residential Building”.
The question is often raised with us – what does it exactly mean by “residential Building”. Sadly, in all of the definitions included in the REIWA Annexure “residential Building is not defined.
2. What is the residential Building?
In the absence of a clear definition of a residential Building within the REIWA Annexure, The Industry Association of Building and Property Inspectors in WA Inc (“Inspect WA”) of which Houspect is a Founding Corporate Member obtained independent legal advice on what is a “residential Building”. Sounds simple, or is it?
So here is the answer. The elements on a property which are considered to be within the definition of residential Building include:
- Everything under the main roof even if added to, post initial construction
- Verandah constructed at the same time that the residential building was constructed
- Standalone granny flats
- Alfresco under main roof
- Standalone structures containing habitable rooms in accordance with Building Approvals
- Retaining walls directly associated with the foundations of the residential building
So the above resolves one question but raises the next question. What is not part of a residential building? The elements on a property which are considered to be outside the definition of residential Building include:
- Patios & Pergolas
- Fences, retaining walls
- Swimming pools
- Garden walls
- Decorative installations
- Retaining walls not associated with the foundations of the residential building
So now it is clear what parts of a property are considered to be within the residential Building and what is not.
3. Who Cares?
Buyers do! If a Buyer is relying on the REIWA clause to protect themselves against Major Structural Defects on the property they are buying, it becomes a critical issue for them.
The REIWA annexure talks about major structural defects to the residential Building so if the Building Inspector identifies a Major Structural Defect beyond the residential Building, the Buyer has no protection under the standard REIWA Annexure on that issue.
If the Buyer is aware of the limitation of the Annexure then it is not an issue. However, more often than not, Buyers are not aware of the issue.
On a regular basis Houspect will identify a major structural defect beyond the residential Building but as the defect is not be on the residential Building, the Buyer cannot invoke the Pre Purchase Building Inspection Annexure. Some buyers are very disappointed about the limitations associated with Annexure.
So knowing what is and what is not a component of the residential Building is critical.
4. REIWA Annexure Update October 2019
In circa October 2019, REIWA introduced a new version of the REIWA Pre Purchase Building Annexure. This latest version of the Annexure enables Buyers to add in structures beyond the residential Building by writing in the Annexure in the place provided under the words “and of the following described areas”.
While we acknowledge this is a positive enhancement to the REIWA Annexure it requires all of the stakeholders to the Contract to have a solid understanding of what residential Building actually means and hence what should be added to the discretionary section under the words “and of the following described areas”. Sadly, these optional “extra areas” are rarely utilised as many Buyers simply do not read the Annexure.
If Buyers want the limited protection of the REIWA Pre Purchase Building inspection to extend to all structural elements on the property they must add in additional items to the standard clause otherwise they will simply be excluded!
5. Need more Info
6. The Disclaimer
The above is not intended as legal advice. Parties to a property transaction should obtain independent legal advice on this issue from a Lawyer who specialises in WA property transactional Law.
7. The Advertisement
Houspect undertakes a range of pre purchase building inspections and has been doing so for more than 40 years in WA. 60,000 plus property inspections in WA is a unique record.
Call Houspect to discuss your unique Pre Purchase Building inspection requirements.
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