From understanding the significance of these conditions to navigating the process seamlessly in conveyancing, it’s crucial to be well-informed about building and pest conditions and reports in QLD real estate transactions. 

This guide covers critical aspects, helping you identify potential issues, negotiate effectively, and ensure a smooth property sale or purchase. 

Whether you’re a buyer or seller, knowing these details can protect your investment and facilitate a successful transaction.

What is a building and pest condition on a contract?

A building and pest clause in a standard contract gives a buyer the opportunity to have a building and pest inspection conducted to ensure the property is in a condition acceptable to them. It is the buyer’s responsibility to obtain quotes and engage a Building and/or Pest Inspector they are happy with. In some instances, you can hire a Building Inspector and a Pest Inspector separately.

Any inspection must be conducted by a Licensed Inspector, and it is preferable that a written report be provided.  

Once the buyer receives their building and pest report, under the standard terms of an REIQ contract, they have two options:

  1. Accept the property in its current condition; or
  2. Terminate the contract on the basis that they are not happy with the current condition of the property.

However, in the spirit of keeping the contract going, a buyer may choose to request that the Seller fix certain items of concern, or alternatively, negotiate a price reduction.

It is important to note that the Seller is under no obligation to enter into any negotiations of this type, and it is their choice entirely as to whether they engage in the process. There is nothing in the contract that forces a seller to negotiate.

What is a building and pest report?

A building and pest inspection is a comprehensive assessment of a property’s condition and structural soundness conducted by qualified professionals. 

This ensures that the property you would be purchasing is structurally maintained and that there are no pest concerns. 

Depending on who is hired to perform the inspection, each building and/or pest report is written differently, however, they all assess the same aspects of a property. These inspections usually include:

  • Visual inspections of the building/s
  • Roof systems (internal and external)
  • Bedrooms
  • Rooms
  • Bathrooms
  • Kitchen
  • Laundry
  • Toilets
  • Exterior 
  • Footings
  • Garaging
  • Site
  • Services
  • + more

The assessor will highlight building materials, conditions and defects and whether such defects are major or minor for all these areas, as well as attaching required photographs and comments. Near the conclusion of the report, the assessor will typically mention any recommended actions to take for any renovations, repairs or rectification that is or may be needed. 

Please note there are other specific types of inspections available in addition to the above being: 

  • Thermal and Infrared for suspected moisture readings; or
  • Illicit drug residue using laboratory testing and/or service dogs; or
  • Asbestos

You would need to engage specific qualified inspectors to conduct these types of inspections.

The report will also outline the possibility of a pest infestation. Termites are typically the most common pests discovered in building and pest inspections; however other rodents might create issues to be considered by potential buyers. Cockroaches, mice, rats and other rodents are examples of pests that commonly reside in dwellings.

Why is a building and pest condition important?

Being one of the conditions that is commonly used in a standard purchase of a property, it is the buyer’s responsibility to arrange a qualified inspector to conduct the search. The buyer then needs to consider whether to continue with the sale or terminate the contract. The report provides crucial information, identifying any underlying structural issues, damage from pests or other problems that might not have been mentioned or visible during a regular inspection. 

Should the contract already be signed, terminating through an unsatisfactory building and pest report is a valid termination and can be done without a penalty unlike the “cooling off” penalty  – which can be thousands of dollars. Once all other conditions are met (including deposits, finance and special conditions), the contract goes unconditional, where there is no further right of termination of the contract, unless another party fails settlement. 

Therefore, it is vital that you are completely satisfied with the building and pest report before satisfying the condition.

Who pays for building and pest reports?

As a buyer, it is your responsibility to arrange for a qualified professional to conduct the building and pest inspection. You have the option of getting a referral from your real estate agent, but it is always good to do your own research and find the best inspector for you. 

As the buyer is responsible for arranging the inspection, they will also incur any costs of the assessment. Each company varies in price, so it’s good to get multiple quotes to ensure you are confident you are getting a good price. This cost will be invoiced directly to you around the time of the inspection and is not payable as part of the fees for the purchase of the property and stamp duty etc. 

What can I do if I’m not happy with the results of my building and pest report?

As a buyer, if you receive your building and pest report, and are unsatisfied with any of the findings, under the terms of the contract, you have the right to terminate the contract or continue and satisfy the clause. You may choose to request for items to be fixed or a price reduction, however as noted above, the Seller is not obliged to enter into these negotiations.

Key Takeaways

  • Building and pest conditions are essential for ensuring the property is in acceptable condition before finalising the purchase.
  • It is the buyer’s duty to obtain and review the building and pest inspection, conducted by a licensed inspector.
  • Buyers can accept the property as is, request repairs or price reductions, or terminate the contract based on the inspection report.
  • Inspections cover structural soundness, pest infestations, and recommend necessary repairs or actions.
  • The buyer is responsible for arranging and paying for the building and pest inspection.
  • Sellers are not obligated to negotiate or make repairs based on the inspection findings.
  • Ensuring satisfaction with the report before finalising the contract is crucial to avoid penalties or future issues.

Are you buying or selling a property

Our experienced Ipswich conveyancing team is here to help. We offer expert guidance to navigate the complexities of property transactions, ensuring a smooth and hassle-free process.

Contact us today to book a free consultation and move forward with confidence.