Caution is recommended when structural defects are identified in a building inspection report and the standard REIWA building inspection clause has been utilised in a West Australian Property Offer and Acceptance Contract.
While not common, occasionally structural defects are identified when a building inspection is conducted. What buyers and agents do next is critical.
When a building inspection identifies a structural defect in a property, it will often be a surprise to both the vendor and the buyer. It is important that the stakeholders have a clear understanding of the structural defect and how it can be resolved.
Structural defects can range from relatively inexpensive issues which can be resolved for less than $1,000 through to significant structural defects, with remedial action costing tens of thousands of dollars.
In amongst the emotion of a real estate transaction, it is important that stakeholders have clarity on exactly what they are dealing with and what they need to do to protect their positions. Identifying potential problem areas can be a challenge in the case of existing structures, so an inspection by a licensed building inspector is imperative.
In a recent presentation to the Australian Institute of Conveyancers WA Division, Matthew Ellis from MGB Legal, raised some very important issues in relation to several key components of the standard REIWA Building Inspection Clause.
Importantly, when a purchaser receives a building inspection report identifying that a property has a structural defect there are some very key requirements:
The above requirements open up a whole range of issues which agents and buyers need to carefully consider, ensuring that the buyer’s contractual entitlements are preserved.
As indicated, unless the very specific requirements identified above are followed, buyers’ expectations on their entitlements may not be fulfilled.
The above is not intended to be legal advice, and agents and buyers should seek professional, legal and or settlement agent advice when dealing with these issues.