On occasions a Pre Purchase Building Inspection report will identify a Major Structural Defect on a residential Building which will enable the Buyer to invoke the often used Real Estate Institute WA (“REIWA”) Pre Purchase Building Inspection Annexure. But what to do?
The following is NOT Legal Advice. Readers should seek independent Legal Advice as appropriate.
There are some that would argue that the REIWA Annexure is complex and in some regard this is true when it comes to relying on this component of the REIWA Annexure. Judge for yourself.
In short the required sequence of events is:
- The Buyer must serve a copy of the Building Inspection report on the Seller, their Agent or the Sellers Representative by the due date (defined in the Annexure or Contract)
- The Buyer must then serve a Structural Defect Notice on the Seller within 3 days of serving the Building Inspection Report.
- The Seller must elect in writing to the Buyer within 5 business days of Item 2 if they agree to remedy the Major Structural Defects, as defined in the Major Structural Defects Notice, by utilising a WA Registered Builder to remedy those defects.
- Where the Seller does not elect in writing to remedy the Major Structural Defects as defined, by the required date see 3. above, the Buyer must Lodge a Notice of Termination if they choose not to proceed with the Contract. The Annexure requires the Termination Notice to be served within 5 business days of the Date when the Seller should have elected in writing to remediate the Structural Defects. I.e. Within 5 business days of the date specified in item 3 above.
- Where the Seller elects to remediate the defects, then the Seller is required to have those major structural defects remediated by a WA Registered Builder and provide evidence of completion of the work.
So the two key issues above is having suitable paper work that the stakeholders can utilise during the process as well as worksheet to calculate all of the required dates! If the sequence, paperwork or dates are incorrect, the Annexure may be negated. The Industry Association of Building and Property Inspectors in WA – Inspect WA of which Houspect WA is a Founding Corporate Member has developed Notices and worksheets relating to the above. They can be accessed here.
98% of the time the formal legal approach that is defined and required by the REIWA Annexure is not utilised and property Buyers and Sellers simply agree and negotiate acceptable outcomes. 2% of the time parties may need to protect their position. The challenge is whether or not you will end up in the 2%.
The above relates specifically to the REIWA Australian Standard Pre Purchase Inspection for Major Structural Defects Annexure Form 167 10/19. Some Agents and Agencies utilise their own Annexures which would require independent legal advice.
Once again the above is not Legal Advice. If you need legal advice on this issue then Matthew Ellis, Director MGB Legal in Perth (Ph 6104 0555 ) specialises in property transaction Law and can provide legal advice on these types of issues.
Build, Buy, Invest in property with confidence.