It is crucial to conduct property inspections before signing the contract, when purchasing property in Victoria or Queensland, Australia.

When defects are discovered after a purchase, it may lead to expected costs and the purchaser may be precluded from making a claim. Even if the purchaser is entitled to make a claim, the process can be lengthy and complex.

Purchaser’s Responsibility

While sellers are required to meet certain disclosure obligations by law, property transactions follow the “caveat emptor” principle – let the buyer beware.

This means that purchasers must make their own enquiries and investigate the quality of the property before they enter into a contract to buy that property (unless the contract of sale of is subject to other conditions).

In Victoria, once the contract is signed, under the general conditions of the contract, sellers are only obliged to deliver the property at settlement in the same condition as it was on the day of sale (fair wear and tear excepted). However, in Queensland, under the general conditions, the property is at the purchaser’s risk from 5 pm on the first business day after the contract date. This means if there are any damage to the property between the contract date and the settlement date, it will the purchaser’s responsibility and not the seller’s. 

It is therefore highly recommended to conduct a property inspection before signing a contract. An inspection helps uncover potential issues that could affect your decision or lead to unexpected costs, which is pivotal on the value of a property.

Contractual Conditions

Purchasers may negotiate a building and pest inspection clause to be inserted into their contract of sale. This allows for purchasers to engage qualified building inspectors and/or pest inspectors to identify any hidden issues.

If an inspection reveals issues, you can use the report to negotiate repairs, seek a price reduction, or even withdraw from the contract if the issues are significant.

Any agreements made regarding repairs or price reduction based on the inspection report should be in writing and should be drafted by a solicitor with the legal expertise.

Vendor’s Disclosure

In Victoria, Vendors are required to provide a Vendor’s Statement (Section 32 Statement) together with certain certificates, which discloses relevant information about the property. This may include details on any known defects or issues. However, this document might not uncover all hidden problems, making an independent inspection essential.

In Queensland, under the Property Law Bill 2023 (Qld), a new mandatory sellers’ disclosure regime will be introduced requiring a disclosure statement and prescribed certificates to be provided to prospective purchasers. The commencement date for Property Law Bill 2023 (QLD) has yet to be announced, stay tuned for the latest updates.

If a seller fails to disclose known issues or misrepresents the condition of the property, you may have legal grounds for a claim. However, proving misrepresentation can be complex and a lengthy process.

Final Inspections Before Settlement

Under the general conditions of the contract, purchasers are entitled to inspect the property before settlement.

Purchasers should check that the property is in the same condition as it was on the day of signing of the contract and any agreed-upon works or repairs have been completed.

Consult your Lawyers

Prior to signing a contract, it is highly recommended that you seek advice from a solicitor specializing in property transactions.

At Hope Earle, we can offer you comprehensive support throughout the purchasing process, from reviewing the contract and section 32 Statement, to negotiating contract terms and managing legal implications of inspection findings.

If you have any questions or require assistance, please contact Charlotte Pong from our property law team on 03 9600 3330, 07 5597 3788 or at property@hopeearle.com.au.