Subject To Building Inspection Explained

Find out all you need to know about what Subject to Building Inspection means right here with Savvy.

Last updated on April 21st, 2022 at 11:11 am by Cate Cook

What does subject to building inspection mean?

When buying a property – be it an apartment, unit, townhouse or detached house – you may have seen the phrase ‘subject to building inspection’ on the sales contract. What is the exact meaning of this phrase, is it important to include this clause in a sale contract and what protection does it offer to the buyer of a property? Savvy delves into the subject of building inspections to tell you all you need to know.

What does 'subject to building inspection' mean?

The phrase ‘subject to building inspection’ is a clause inserted into a property sale contract which means the sale is conditional on a satisfactory building inspection being carried out.  It’s a very common clause in a property sale contract, although it’s not compulsory to have a pest or property inspection before purchasing your first home.

Whether you do decide to include a ‘subject to building inspection’ clause in your sale contract can depend on many factors, including:

  • the age of the property you are considering purchasing
  • whether it’s part of a strata title or detached home
  • if it’s a newly-built property, whether previous building inspections have been carried out prior to the property being listed for sale
  • whether your bank or non-bank lender requires a building inspection prior to approving your finance
  • whether you have noticed any issues in the building when you inspected it

What should a 'subject to building inspection' clause say?

The standard ‘subject to building inspection’ clause inserted into most property sale contracts simply requires that a satisfactory building inspection is received for the sale to proceed. 

However, other conditions can be inserted into the ‘subject to…’ clause which specify what the consequences may be if significant problems are found when the building inspection is carried out.  These may include:

  • a clause stating the vendor will pay for any urgent repairs required
  • a clause allowing the buyer to re-negotiate the sale price if significant issues are revealed by the building inspection
  • a clause stating the vendor will permit further inspections to be carried out which may clarify the extent or severity of the building issue which has been revealed

How much does a building inspection cost?

The cost of a building inspection varies from state to state in Australia, but you should expect to pay between $400 to $600 for a building inspection and up to $700 for a combined pest and building inspection for a standard house or unit.  Of course, if you are considering buying a strata titled unit, and it becomes necessary to inspect the structural integrity of the entire building, expect to pay far more for your building inspection.

 What exactly is inspected in a building report?

During a building inspection, the inspector will look at all elements of the building, from the foundations, bearers, joints and stumps, to floors and walls and ceilings, to electrical wiring, plumbing, drainage and roofing.  Most building inspectors are either builders or engineers, so they may want access to the attic or roof crawl-space of the building, or underneath the house if it’s built on stilts, to check the building has been constructed in accordance with the relevant and applicable building codes. 

They’ll also check for any hidden defects such as rising damp or rotting floorboards that may have been covered over or disguised by rugs or carpets during an open inspection.  This should otherwise be one of the many questions you should ask at an open inspection.

Should you always do a building inspection before agreeing to buy a property – and are there any reasons not to?

It isn’t compulsory to get a building inspection done but it’s highly recommended, particularly if you’re considering buying an older property, one that has been extended or modified from its original or one which is attached to or part of another dwelling.  You should have a property inspection checklist to consider if you conduct one to ensure all of your concerns are covered.

If you’re considering applying for a home loan for a recently-constructed, modern detached home which has been well maintained, having a ‘subject to building inspection’ clause in the sale contract may put you at a disadvantage compared to other buyers who offer an unconditional sale contract.  In a highly competitive property market, you may wish to consider this disadvantage weighed up against the risk of there being a major structural defect in the property you’re wanting to buy.

More related questions about ‘subject to building inspection’ clauses

How long do building inspections take to do?

Naturally, this will depend on the size of the building being inspected but, for a conventional three-bed home, the inspection will take between 1.5 and 2 hours. This will allow the inspector time to examine the entire property, both inside and out, to identify any existing building issues.

Do I need to get a lawyer to word my 'subject to building inspection' clause before I sign it?

Probably not, as most real estate agents have sales contracts which already have all the standard relevant ‘subject to…’ clauses worded correctly.  However, if you have had a building inspection done before you’ve signed your sale contract and that inspection has revealed issues which you wish to have rectified before signing the final sale contract, you should seek legal advice on the wording of the document you sign and exchange with the vendors.

What should I do if I'm unhappy with the quality of the building inspection report I receive?

Firstly, you should contact the inspector you appointed to carry out the building inspection and try to resolve your complaint directly.  If this is not successful, you may want to contact the company that employs the inspector.  In Australia, the building inspection industry is largely unregulated and no formal qualifications are required to advertise your services as a building inspector (except in Queensland).  Before you employ an inspector, you should check the person you employ is a qualified builder, engineer or structural engineer, or has similar appropriate qualifications.

Will a building inspector look for any termite problems in the building?

Unless you pay for a combined pest and building inspection, a building inspector will not specifically look for signs of a termite infestation (although should mention the fact if obvious signs of termite activity are found).  If you want to make sure the building you wish to buy does not have a termite problem, you should pay for a specific pest inspection to be done, as this requires specialist equipment to listen for termite activity inside walls and cavities.  In this case, your sales contract clause would be ‘subject to a pest and building inspection.’

My building inspection found rising damp in an outside wall. Should I cancel the purchase of the house?

If your building inspection has revealed a building issue that you weren’t previously aware of, you’ll need to thoroughly investigate the problem before deciding if it’s serious enough to invoke the ‘subject to…’ clause and decide to withdraw from the purchase.  You should speak to the building inspector and, if necessary, ask for a second, more detailed inspection to be carried out to find out the extent and cause of the rising damp and to determine if it can be easily rectified.  You may decide to proceed with the purchase regardless of whether the property you’re purchasing otherwise meets your standards.