You have found your dream property, signed the contract, and settlement day is approaching. But before you collect the keys, there is one crucial step that could save you thousands of dollars and countless headaches: the pre-settlement inspection.
A pre-settlement inspection is your final opportunity to verify that the property is in the agreed condition before you complete the purchase and take ownership. This walkthrough can reveal damage, missing inclusions, or incomplete repairs that you have every right to have addressed before handing over your money.
Whether you are purchasing an established home, a newly constructed property, or an off-the-plan apartment, understanding what to expect during a pre-settlement inspection can help you identify issues, protect your investment, and avoid costly surprises after settlement.
Many buyers underestimate the importance of the pre-settlement inspection. It is your last line of defence before becoming legally responsible for a property and its condition.
What Is a Pre-Settlement Inspection?
A pre-settlement inspection, also known as a final inspection or handover inspection, is a walkthrough of the property conducted shortly before the settlement date. The purpose is to confirm that the property is in the same condition as when you signed the contract, or in the case of new builds, that construction has been completed to the agreed standard.
During this inspection, you verify that:
- The property has not been damaged since the contract was signed
- All inclusions listed in the contract are present and functional
- Any agreed repairs or rectification work has been completed
- The property is clean and ready for handover
- For new builds, construction defects are identified before you take possession
Who Should Attend the Inspection?
Several parties may attend a pre-settlement inspection depending on the type of property and the circumstances:
- The buyer: You have the right to attend and should always be present
- Real estate agent: Often facilitates access and can answer questions about the property
- Builder or developer: For new builds, to address any construction queries
- Independent building inspector: Recommended for thorough professional assessment
- Your solicitor or conveyancer: May attend in complex situations
When to Schedule Your Pre-Settlement Inspection
Timing is critical for pre-settlement inspections. Schedule too early, and issues may arise between the inspection and settlement. Schedule too late, and you may not have time to address any problems discovered.
| Property Type | Recommended Timing | Key Considerations |
|---|---|---|
| Established homes | 5-7 days before settlement | Allows time to negotiate repairs if needed |
| New builds | 7-14 days before settlement | Builder may need time to rectify defects |
| Off-the-plan apartments | 7-14 days before settlement | First opportunity to see completed property |
| Vacant properties | 3-5 days before settlement | Less risk of changes, easier access |
For new builds and off-the-plan purchases, scheduling earlier is advisable because builders may require additional time to rectify any defects identified. This also gives you leverage to ensure issues are addressed before you finalise payment.
What to Check During a Pre-Settlement Inspection
A thorough pre-settlement inspection covers both the interior and exterior of the property. Use a systematic approach to ensure nothing is overlooked.
Structural and Cosmetic Elements
Examine the property's structural integrity and cosmetic condition:
- Walls and ceilings: Check for cracks, water stains, or damage
- Flooring: Look for scratches, stains, loose tiles, or damaged floorboards
- Doors and windows: Test that all open, close, and lock properly
- Paintwork: Check for consistency, touch-ups, and any damage
- Built-in fixtures: Inspect wardrobes, shelving, and cabinetry
Plumbing Systems
Test all plumbing fixtures and check for leaks or drainage issues:
- Run all taps and check water pressure and temperature
- Flush all toilets and check for proper operation
- Test showers and baths for drainage
- Check under sinks for leaks or moisture
- Verify hot water system is functioning correctly
- Inspect visible pipes for corrosion or damage
Electrical Systems
Verify all electrical systems are working safely:
- Test all power points with a device or tester
- Check all light switches and light fittings
- Test exhaust fans in bathrooms and kitchen
- Verify smoke detectors are present and functional
- Check the switchboard for proper labelling
- Test any security systems or intercoms
Appliances and Fixtures
If appliances are included in the sale, test each one:
- Oven, cooktop, and rangehood
- Dishwasher operation and drainage
- Air conditioning and heating systems
- Ceiling fans
- Any other appliances listed in the contract
External Areas
Do not neglect the property's exterior:
- Fencing: Check condition and that gates operate properly
- Driveway and paths: Look for cracks or damage
- Drainage: Ensure stormwater drains are clear
- Garden and landscaping: Verify agreed condition
- Garage: Test doors and check for any damage
- Outdoor lighting: Test all external lights
- Pool or spa: Check equipment and condition if applicable
Pre-Settlement Inspection Checklist
Use this checklist to ensure you cover all essential areas during your inspection:
| Area | Items to Check | Common Issues |
|---|---|---|
| Kitchen | Appliances, taps, cabinets, benchtops | Scratched benchtops, faulty appliances |
| Bathrooms | Taps, toilet, shower, tiles, exhaust fan | Leaks, poor drainage, cracked tiles |
| Bedrooms | Wardrobes, power points, windows, carpet | Damaged doors, stained carpet |
| Living areas | Flooring, walls, windows, lighting | Wall damage, scratched floors |
| Laundry | Taps, tub, cabinets, dryer vent | Blocked drains, missing fixtures |
| Garage | Door operation, lights, floor condition | Faulty door mechanism, oil stains |
| Exterior | Fencing, driveway, landscaping, drainage | Fence damage, blocked drains |
The Role of Independent Building Inspectors
While you can conduct a pre-settlement inspection yourself, engaging an independent building inspector provides significant advantages, particularly for new builds or if you have concerns about the property's condition.
Benefits of Professional Inspection
- Unbiased evaluation: Independent inspectors have no vested interest in the sale proceeding
- Expert knowledge: Trained to identify defects that untrained eyes may miss
- Hidden defect identification: Can detect issues behind walls or in concealed areas using specialised equipment
- Documentation: Provide detailed reports that can be used in negotiations or disputes
- Peace of mind: Confidence that the property has been thoroughly assessed
When to Engage an Inspector
Consider hiring a professional inspector if:
- You are purchasing a new build or off-the-plan property
- The property is high value or has complex features
- You noticed issues during earlier inspections
- You cannot attend the inspection personally
- You want documented evidence of the property's condition
Builder's Defect Rectification Process
For new builds, the builder has legal obligations to rectify defects before settlement. Understanding this process helps you navigate any issues that arise.
Minor vs Major Defects
| Defect Type | Examples | Typical Resolution |
|---|---|---|
| Minor defects | Paint touch-ups, scratched surfaces, minor adjustments | Can be rectified after settlement under warranty |
| Major defects | Structural issues, waterproofing failures, safety hazards | Must be rectified before settlement |
| Incomplete work | Missing fixtures, unfinished areas, incomplete landscaping | Must be completed before settlement |
Rectification Timeline
The time required for rectification varies depending on the nature and extent of defects:
- Minor cosmetic issues: 1-3 days
- Moderate defects: 3-7 days
- Major structural issues: May require settlement postponement
Legal Implications of Unresolved Issues
If significant issues are discovered during your pre-settlement inspection, you have several options available under Australian property law.
Your Options
- Negotiate repairs: Request the vendor or builder rectify issues before settlement
- Negotiate price reduction: Agree to a reduced purchase price to cover repair costs
- Delay settlement: Postpone until issues are resolved (may require legal advice)
- Withhold funds: In some cases, a portion of the purchase price may be held in trust until repairs are completed
- Terminate contract: In cases of major undisclosed defects (legal advice essential)
Seeking Legal Advice
Consult your solicitor or conveyancer if you discover significant issues during your pre-settlement inspection. They can advise on:
- Your rights under the contract of sale
- Whether the issue constitutes a breach of contract
- The best course of action for your circumstances
- How to document issues for potential legal proceedings
How to Request Repairs Before Settlement
If you identify defects during your pre-settlement inspection, follow these steps to request repairs:
Step 1: Document Everything
- Take clear photographs of all defects
- Note the location and nature of each issue
- Keep a written record with dates and times
- Obtain a professional inspection report if applicable
Step 2: Submit a Formal Request
- Prepare a written list of defects requiring rectification
- Submit through your solicitor or conveyancer
- Include photographs and supporting documentation
- Set a reasonable timeframe for response
Step 3: Negotiate Resolution
- Be prepared to negotiate on minor issues
- Stand firm on major defects affecting safety or value
- Consider alternative remedies such as price adjustments
- Get any agreements in writing
Frequently Asked Questions
What is the main purpose of a pre-settlement inspection?
Short answer: To verify the property is in the agreed condition before you complete the purchase and take ownership.
The pre-settlement inspection allows you to confirm that the property has not been damaged since you signed the contract, all inclusions are present and working, any agreed repairs have been completed, and the property is ready for handover. For new builds, it is your opportunity to identify construction defects that need to be rectified before settlement.
Should I hire a professional inspector for a pre-settlement inspection?
Short answer: It is highly recommended for new builds and valuable properties, and beneficial for any purchase where you want documented evidence.
Professional inspectors bring expertise in identifying defects that may not be obvious to untrained eyes. They use specialised equipment to detect hidden issues and provide detailed reports that can be used in negotiations or legal proceedings. For established homes, you may conduct the inspection yourself, but for new builds where construction quality is being assessed, professional inspection is strongly advised.
What is the difference between minor and major defects?
Short answer: Minor defects are cosmetic issues that do not affect habitability, while major defects involve structural problems, safety hazards, or significant failures.
Minor defects include things like paint touch-ups, small scratches, or minor adjustments that can typically be addressed after settlement under warranty. Major defects are serious issues such as structural problems, waterproofing failures, electrical hazards, or anything that makes the property unsafe or uninhabitable. Major defects should generally be rectified before settlement proceeds.
Who is responsible for fixing defects found during a pre-settlement inspection?
Short answer: The vendor or builder is generally responsible for rectifying defects or damage that occurred before settlement.
For established homes, the vendor must deliver the property in the same condition as when the contract was signed, fair wear and tear excepted. Any damage or changes that occurred after contract signing are the vendor's responsibility to rectify. For new builds, the builder must complete construction to the agreed specifications and rectify any defects identified before handover. The specific obligations depend on your contract terms and state legislation.
How far before settlement should I schedule the inspection?
Short answer: Schedule 5-7 days before settlement for established homes, and 7-14 days for new builds.
This timing allows sufficient time to identify any issues and negotiate repairs or other remedies before settlement. For new builds, allowing more time is advisable as the builder may need several days to rectify defects. Scheduling too close to settlement leaves little time to address problems, while scheduling too early risks issues arising between inspection and settlement.
What legal protections do buyers have if issues are found?
Short answer: Buyers can negotiate repairs, seek price reductions, delay settlement, or in serious cases, potentially terminate the contract.
Australian property law provides buyers with protections when properties are not delivered as agreed. Your options depend on the nature and severity of the issues, the terms of your contract, and applicable state legislation. For minor issues, negotiating repairs or a small price reduction is common. For major defects, you may be entitled to delay settlement until rectified, withhold funds in trust, or seek legal remedies. Always consult your solicitor for advice specific to your situation.
What happens if the vendor refuses to fix defects before settlement?
Short answer: You may need to seek legal advice on your options, which could include delaying settlement, negotiating a price reduction, or pursuing legal action.
If the vendor refuses to rectify significant defects, consult your solicitor immediately. Depending on the severity of the issues and your contract terms, you may be able to delay settlement until issues are resolved, negotiate a reduction in the purchase price to cover repair costs, or pursue legal remedies for breach of contract. For minor cosmetic issues, it may be more practical to proceed with settlement and address them yourself rather than risk the sale falling through.
Can I do a pre-settlement inspection myself?
Short answer: Yes, you can conduct your own inspection, but professional assistance is recommended for new builds or complex properties.
For established homes where you are mainly checking that nothing has changed since contract signing, a DIY inspection using a comprehensive checklist can be sufficient. However, you may miss technical defects or hidden issues that a professional would identify. For new builds, where you are assessing construction quality for the first time, professional inspection is strongly recommended to ensure all defects are identified and documented before you take ownership.
What should I bring to a pre-settlement inspection?
Short answer: Bring a copy of the contract, a checklist, your phone for photos, a torch, and any previous inspection reports.
Having your contract allows you to verify that all inclusions listed are present. A comprehensive checklist ensures you do not overlook any areas. Your phone is essential for taking photos and videos of any issues found. A torch helps inspect dark areas like roof spaces, under sinks, and in cupboards. If you had a building inspection when purchasing, bring that report to verify any noted issues have been addressed.
Is a pre-settlement inspection the same as a building inspection?
Short answer: No, they serve different purposes and occur at different stages of the buying process.
A building inspection is typically conducted before you sign the contract, during the due diligence period. It is a comprehensive assessment of the property's structural condition and identifies existing defects. A pre-settlement inspection occurs just before settlement and verifies the property has not changed since contract signing and that any agreed works have been completed. While both are important, they serve different purposes in protecting your property purchase.
Can the vendor refuse access for a pre-settlement inspection?
Short answer: Generally no, as the right to a pre-settlement inspection is typically included in the standard contract of sale across Australian states.
Most standard contracts of sale in Australia include a clause allowing the buyer to conduct a pre-settlement inspection. In NSW, the standard contract provides for inspection on reasonable notice. If a vendor refuses access without valid reason, this may constitute a breach of contract. However, you must provide reasonable notice and conduct the inspection at a mutually agreeable time. If access is being denied, contact your solicitor immediately for advice on your options.
What if the property is tenanted during the pre-settlement inspection?
Short answer: You can still conduct an inspection, but you must coordinate with the tenant and provide appropriate notice as required by tenancy legislation.
When purchasing a tenanted property, you are still entitled to a pre-settlement inspection. The real estate agent or vendor should arrange access with the tenant, typically requiring 24 to 48 hours notice depending on your state. Be respectful of the tenant's belongings and privacy during the inspection. You may need to work around furniture and personal items, which can make it harder to inspect some areas. Consider engaging a professional inspector who is experienced with tenanted property inspections.
How do I check if appliances are working during the inspection?
Short answer: Test each appliance included in the sale by turning it on and running it through a basic cycle or function.
For ovens and cooktops, turn on each element and check that it heats up. Run the dishwasher through a quick cycle to check for leaks and drainage. Test air conditioning on both heating and cooling modes if applicable. Check the rangehood fan and light. For hot water systems, run hot water taps and verify temperature. Test ceiling fans on different speeds. Document any appliances that do not work properly with photographs and notes for your rectification request.
What is the difference between a defect and fair wear and tear?
Short answer: Defects are damage or faults that occurred between contract and settlement, while fair wear and tear is normal deterioration from everyday use that was present at contract signing.
Fair wear and tear includes minor scuff marks on walls, slight carpet wear in high traffic areas, or minor fading of paint from sunlight. These existed when you inspected and agreed to purchase the property. Defects are new issues that arose after the contract was signed, such as a broken window, new water damage, holes in walls from removed fixtures, or damaged flooring from furniture removal. The vendor is responsible for rectifying defects but not fair wear and tear.
Key Takeaways
- A pre-settlement inspection verifies the property is in agreed condition before you complete your purchase.
- Schedule your inspection 5-7 days before settlement for established homes, or 7-14 days for new builds.
- Check all structural elements, plumbing, electrical systems, appliances, and external areas systematically.
- Engage a professional inspector for new builds, high-value properties, or when you need documented evidence.
- Document all defects with photographs and written descriptions for negotiation purposes.
- Builders are legally obligated to rectify major defects before settlement on new builds.
- Consult your solicitor if significant issues are discovered to understand your legal options.
- Minor defects may be addressed after settlement under warranty, but major issues should be resolved before handover.
References and Resources
- NSW Fair Trading
- Consumer Affairs Victoria
- Queensland Building and Construction Commission (QBCC)
- WA Building Commission
- Consumer and Business Services South Australia
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