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.
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 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:
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.
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.