1. Background
We have previously written about the importance of termite inspections when buying a property in WA.
- Pest Inspections in WA – The Alarming Facts that You Need to Know! Read here.
- Pre-purchase termite inspections. Read here.
- Check your western Australian wood: termites and other issues. Read here.
So hopefully we have clearly established the need to obtain a termite inspection when purchasing a property in WA.
2. Is a Termite Inspection an automatic right when you purchase a property when using the standard REIWA Contact?
Surprisingly no. The Standard REIWA Offer to purchase Contract is essentially an offer to purchase as is, where is, Contract unless specific conditions or Annexures are added to the Contract. So, adding a condition or Annexure relating specifically to a termite pest inspection on the property being purchased can be a critical condition for property Buyers.
On a positive note, REIWA provides a standard Annexure titled Australian Pre-Purchase Inspection for Termite Pest (Current document reference 04/22).
The challenge with this Annexure is that there are several potential issues that property Buyers and Sellers should carefully consider.
3. The Standard REIWA Pest Annexure
The REIWA Annexure is better than nothing. However, reading the fine print in the Annexure reveals that the Annexure contains some potential challenges that Buyers and Sellers need to be aware:
- a) The inspections is a visual non-invasive inspection. Often the true extent of termite damage will require an invasive inspection. For example, within the wall of a timber framed house where termite activity in adjacent area (for example the timber top plate or rafter) has been identified. Invasive inspections are specifically excluded from the annexure and hence possibly from remediation. Net result significant termite damage may not be identified or remediated.
- b) The inspection excludes any activity or damage beyond the residential building (unless the Annexure is physically amended which it can be but rarely is).
- c) The REIWA Annexure refers to any termite damage, however, the Annexure also refers to a Major Structural Defects Notice. This is potentially problematic as there is no other Reference to Major Structural Defects in the Annexure and hence could imply the Seller is only required to fix structural elements.
- d) The Annexure refers:
- i. The Settlement Date will be delayed until the later of:
- ii. Three business days after the Sellers work is completed as certified by the Sellers:
- a) Builder in relation to the Repair
- b) Consultant in relation to the Eradication of the later of both of them if both are required
Treating a termite infestation may take several months and multiple treatments. A single treatment may not be sufficient to resolve the issue especially if the primary termite nest is located some distance from the residential building.
- e) The REIWA Standard Pre-Purchase Inspections for Termite Pest has a very specific sequence of events that must be followed if a Termite infestation is identified within a Pre Purchase Building Termite Inspection report to preserve the Buyers and Sellers rights. It is critical that Buyers and Sellers follow these requirements exactly, otherwise contractual protections can be lost.
4. Observations
4.1 The majority of REIWA Agents will not allow a pre offer termite inspection. Hence, the structure of the Termite Inspection Annexure can become critical for property buyers.
4.2 An observation is that where a major termite infestation is identified it might be more equitable for the Buyer to simply be given the opportunity to terminate the contract as it can be argued that the remedies propose by the Standard REIWA Pest Annexure do not provide the Buyer adequate protection in all situations.
4.3 The standard REIWA annexure by default, relates only to the residential building. So, if there is a 2 metre high termite mound in the backyard with active termites, this is excluded under the REIWA annexure.
5. Recommendation for Buyers utilising Australian Pre-Purchase Inspection for Termite Pest
5.1 Edit the annexure to remove refence to Major Structural Defects under 9.2 of the REIWA Annexure as it simply does not apply.
5.2 Add to the Annexure a clause which requires that the eradication of termites involve the Seller entering into contract to undertake all necessary eradication work and treatment over a 12-month period as required, at the Seller’s cost.
5.3 Add a new clause which states that if termite infestation is identified on the residential building or the property being acquired, the Buyer to has the right to terminate the contract within 10 Business Days of receipt of the Termite Inspection report.
6. Recommendation for Sellers utilising Australian Pre-Purchase Inspection for Termite Pest
6.1 Have the entire property inspected for Termites prior to putting the property on the market, if there is no active termite treatment plan in place. The cost is minimal and can save considerable issues if signs of termite activity are found. Competent, quality, fully licensed and insured Pest Licensed Pest Controller can generally be obtained for circa $200 in the Perth metropolitan area, can be higher in regional areas.
6.2 If termite activities is found on the property prior to putting the property on the market have the Termite issue treated and ensure any damage is professionally remediated.
7. Summary
Termites are real and can be identified in buildings across WA. When buying or selling a residential property it is important that Buyers and Sellers assess the risk of termites being identified on the entire property and if so what protections they do or do not have.
REIWA provides its member Agents with a standard Pest Inspection Annexure to incorporate Termite Inspections into the Pre Purchase Contract. There are potential challenges with this annexure which Buyers and Sellers should carefully consider.
It is acknowledged that many of the above observations are unlikely to be accepted in the majority of residential property purchase transactions. The purpose of this document is to simply bring to Buyer and Sellers some of the broader challenges.
8 Important Note
The above general information was considered correct in Aug 2023. Circumstance will change over time. It is recommended that all readers seek their own professional and or legal advice prior to acting on the information contained in this note.
Build, Buy, Invest in property with confidence.
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Email: enquiry@houspectwa.com.au
