API Blog :: Have your say!

May 24, 2010

Buyer beware! Should sellers have to provide mandatory building inspection reports to prospective purchasers?


Can flood-prone Queensland homes be sold without sellers or agents volunteering the soggy truth? Yes!

BY TIM O’DWYER

What if sellers don’t ‘fess up if there’s no record of council inspections? They can sell regardless!

What if a seller’s carport, garage or deck was built illegally? No selling worries!

What if a home is termite-riddled? Don’t tell!

And if sellers obtain a pre-sale building report showing heaps of problems? Don’t mention the report!

This is why “buyer beware” is the first unwritten rule of real estate in Queensland. Will it stay that way? Yes. Because Queensland’s government refuses to legally oblige home sellers to disclose material information to prospective buyers.

No matter that seven years ago the ACT Labor Government introduced reforms which (not unreasonably) require sellers, before putting a property up for sale, to give to buyers details of building approvals and inspections together with current building/pest inspection reports. The Northern Territory Labor Government is currently proposing to bring in disclosure legislation whereby sellers must (not unreasonably) give buyers swimming pool compliance certificates, flood information and reports on whether structures comply with building laws. And the New South Wales Labor Government will shortly require sellers (not unreasonably) to give buyers building/ pest inspection reports.

When a disgruntled homebuyer recently complained to Queensland Fair Trading Minister Peter Lawlor about expenses needlessly incurred because a seller and an agent failed to disclose building defects and illegal structures, the Minister’s unsympathetic reply merely stated the problem:

“While a real estate agent needs to verify the material facts when selling a property and encourage the seller to disclose all information, there is no obligation or legal requirement for the agent or seller to conduct building and pest inspections, or conduct council approval surveys prior to listing a property for sale.

“Pest and building inspections and council approvals are the responsibility of the purchaser,” he unhelpfully explained.

Earlier this year two estate agents, genuinely concerned about this less-than-satisfactory state of affairs, joined me to meet Minister Lawlor to press the case for full seller-disclosure – for the benefit of buyers, sellers, solicitors and agents alike.

We firstly gave him a can of baked beans, and pointed out how much the label tells a baked beans buyer. By comparison, we continued, Queensland’s homebuyers are told zilch about flooding, termites, outstanding approvals, illegal structures and the like, while standard contract clauses give little redress if buyers’ searches and inspections later uncover matters of concern.

The Minister’s written response was disappointing.

He explained that, with the regulation of property transactions being subject to a complex range of local and state legislative requirements, the government would not consider placing a “full” disclosure onus on sellers: “As the circumstances surrounding individual property sales are so diverse, this form of disclosure could not be readily prescribed or guaranteed.”

The Minister wasn’t convinced that requiring disclosure would significantly enhance Queensland’s consumer protection regime. Nor would it be appropriate, he added, to include seller disclosure requirements in Queensland’s Property Agents & Motor Dealers Act which “specifically regulates the activities of real estate agents, not the conduct of their clients or customers.”

The Minister believes that legally requiring pre-contract disclosure would shift costs to sellers without any guarantee of independence or accuracy. Not only would a further “layer of costs” be added to the sale process but also, he suggests, buyers might still have to conduct their own independent enquiries.

So, Virginia, that is why “disclosure” is a dirty word in the Sunshine State – except for the largely unwanted, widely criticised and initially ill-conceived mandatory sellers’ sustainability declarations introduced by the government this year.

Tim O’Dwyer is a Queensland solicitor, watchdog@argonautlegal.com.au

API readers – tell us what you think! Should sellers be required to provide mandatory building & pest inspections to prospective purchasers?

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31 Comments

  1. I totally agree that the seller should supply the cost of the inspections and this could after the sale be passed on to the buyer who wins the property.

    This way there would be a lot less waste of inspections and quicker sales due to no delays with waiting on additional inspections etc. Also the current owner knows the most about the property hence should be liable to provide all the relevant info required.

    Comment by Mark — May 24, 2010 @ 7:52 pm

  2. Yes, the seller should provide compliance certificates and building approval records from council etc., but I actually disagree that they should supply the building and pest inspection reports. How could you trust reports to be independent? Their builder mate may have done it as a favour for them (happens all the time). It’s almost as bad as a buyer asking the selling agent if they can recommend a builder! What if the report gets doctored between when the seller gets it and when they give it to the buyer? No, these reports need to come from someone who’s being paid by the buyer because they need to be working FOR the buyer.

    Perhaps the cost of these reports could be deducted from the seller at settlement time if the sale goes ahead, or the seller could be asked for reimbursement if the sale doesn’t proceed because of what’s revealed in the building report?

    Ultimately I think it’s naive to believe that the seller will disclose all the faults of the property they’re trying to get rid of.

    Comment by Mary — May 25, 2010 @ 7:10 am

  3. I’m a bit undecided about this. In theory it sounds like a good idea, as it’s annoying to buyers to have to pay for multiple sets of inspections on properties they don’t end up buying.

    However, as Mary (Comment #2) said, it’s possible a situation could develop where real estate agents might recommend their sellers use “tame” building inspectors who are known to be lax and lenient with their inspections.

    This happens in marketeering scams, where the sellers try to refer the buyers to “tame” solicitors who don’t really protect the buyers, but who are more concerned with just ensuring the sale goes through so everyone gets their $$$$.

    I can imagine this happening with mandatory building inspections. The real estate agent says to the inspector “Hey, I can refer you a lot of work – but in return, go easy on the inspections and don’t point out too much stuff, OK? We don’t want to lose the sale…”

    Obviously the agent isn’t going to recommend his sellers use building inspectors that are known to be really tough and thorough.

    I guess it comes down to – if you’re about to spend hundreds of thousands (or millions) of dollars, how much would you trust a building/pest inspection given to you by the sellers?

    Comment by Alain - Gold Coast — May 25, 2010 @ 7:14 am

  4. Damn right they freaking should especially for the naive.

    Comment by Daniel — May 26, 2010 @ 1:13 am

  5. For the reasons mentioned in Comments #2 and #3, I simply wouldn’t trust a building & pest inspection provided by the sellers. Before I actually locked myself into buying a property, I would want to organise one myself with a company I knew had no conflicts of interest.

    However, I do think sellers should have to produce some sort of compliance certificate/warranty confirming that all structures on the property are council-approved. This might stop people deliberating flouting council planning requirements and building non-approved structures, extensions etc. and hoping they can flog the property off to a naive future buyer who might not check.

    Some sort of council compliance warranty would put the onus back on the sellers to ensure all structures are council-approved before they try to sell the property.

    Comment by Michael - Toowoomba — May 26, 2010 @ 1:58 pm

  6. Well what’s wrong with council providing an independent building inspection for every house listed for sale. They inspect every house built why not inspect every house sold. Perhaps every three or five years one must be done if the property is being sold. What qualified building inspector is going to doctor building inspections to risk there license and or being sued for false information.

    Comment by Daniel — May 26, 2010 @ 2:43 pm

  7. I meant the seller might doctor the building report, not the building inspector. If the inspector finds something the seller doesn’t want the buyer to know, the seller could remove that detail from the report before giving a copy to the buyer (I read about this happening once). That’s one of the reasons why I think buyers should source their own report.
    I think the idea of council providing independent building inspections has some merit though, especially for houses that have had major renos done or have a pool etc.

    Comment by Mary — May 26, 2010 @ 3:01 pm

  8. Purchase of the property absolutely not like purchase of caned beans. Price and legal paperwork are very different.

    It is reasonable to expect full set of legal paperwork (e.g. title, statements from various official organisations) from a vendor, however it is very naive to expect fully disclosed inspection reports from the vendor.

    Buyer has plenty of time to do inspections before purchase or put subject to inspections into sale contract, also buyer should pay for inspections as buyer will select inspectors. Attempts to make somebody else to pay for what you need usually lead to bad results – attempts to avoid silly laws.

    Comment by Gleb — May 27, 2010 @ 11:26 am

  9. The first thing any astute investor would suggest is to conduct a property inspection and also if not sure before signing contracts that it be subject to this condition and thorough due diligence or some other “get out” clause.

    Whether you are confident to inspect the property yourself as i often do and have done for all my purchases or have qualified building inspectors. Inspecting hundreds of properties i have come across many many agents far from disclosing and defect that could break you finacially.

    It’s simply greed on the vendors part to take the view that it’s not sensible to have a property inspection report included as part of the selling process. It isn’t any wander it’s already being complimented in one state. With vendors possibly getting hundreds in through a property, expecting each person that wants an inspection report and for them to pay for it is silly.

    Why expect five people to pay $300-$400 each when one could be available for $300 or even just a $20 fee each and if there is 20 people requesting a copy of it then the vendor could subtract that earning if any extra raised off there agents fees.

    Also it would only need to be supplied only if a buyer requested one. Why? Again it’s to rip people off because the governments to date have wanted to generate more jobs for the building inspectors duplicating reports and selling them to a dozen prospective buyers and charging them $300 each report.

    Personally i am experienced enough to not require a report but i also have access to master builders that can do inspections free when i want.

    Comment by Daniel — May 27, 2010 @ 12:31 pm

  10. GO TIMMY BOY !!!!!!!!!!!!!!!!

    FROM THE GOOSE

    Comment by George Rousos — May 27, 2010 @ 2:32 pm

  11. I would not buy a property relying on a building report from a vendor. In most cases you will find that if the agent organisers it you will have a report that says practically nothing and would only report on the sturctural aspect of the home. Agents pay particular attention to recommend building inspectors that just skim the surface and do not write comprehensive reports, so it does not effect the sale of the property. Personally I don’t believe that a real estate agent should be able to recommend building and pest inspectors. Even though they recommend three in most cases they are the three softest inspectors in the area. Some building inspectors particularly tailor their reports to not say anything. We have read many over the years that only comment on the structural aspect of the home when there is thousands of dollars worth of work in other areas. Most do not comment on unapproved additions / illegal structures.

    I am all in favor of having homes sold that are fully compliant however in our area local council records do not go back more than 10 years in some cases. Most building inspectors don’t specifically point out to their clients possible changes or unapproved additions. Example A person purchased a home in the local area. He was alerted to the fact that there may be an unapproved roofed patio addition on the back of the home. He checked with the local council and they told him there was no building records available. Three years after he purchased the home the local council issued him with a compliance notice telling to have the roofed patio approved or remove it. I still cant figure that one out. So you can see that are flaws even in compliance checks.

    If you are going to raise the standrads in the property sales / building and pest inspection industry you need to go to the root of the problem and that is the BSA and the Government Standards. They are not high enough to provide purchasers / the general public with adequate protection in the first place.

    Comment by PB — May 27, 2010 @ 4:09 pm

  12. As a real estate agent who has been wanting full seller disclosure for some time time, of course I agree with Tim O’Dwyer. What is so wrong with the Sellers providing full disclosure of all relevant facts relating to their property as happens in the ACT and having their own building and pest inspection before listing their property for sale? There may well be issues with their property they are not aware of and can easily and economically be fixed.

    Their own inspections will also ensure there are no unpleasant surprises when the buyers get their own inspections.

    Yes, the buyers should still get their own independent inspections. This process would ensure more transparency and hopefully put an end to the practise of many buyers wanting to renegotiate the price once they receive their inspection reports.

    Comment by Chris Warren — May 27, 2010 @ 4:26 pm

  13. Building and Pest Reports have third party disclaimers that means that they only relate to the person who is named on the report or in the case of a vendor the person who pays for it. Relying on a vendors building or pest report does not cover the purchaser it only would give a general indication as to the condition of the property. Building and pest reports also may have time limits so if the home is on the market for some time it may run past the inspection report time limit. If you rely on a vendor reports be sure to read the disclaimers and fine print. Buyer beware.

    If you are buying a home getting your own personal inspection reports is the smartest thing you could ever do.
    $300-$500 is cheap insurance when you are spending hundreds of thousands of dollars.

    Comment by PB — May 27, 2010 @ 4:29 pm

  14. Buidling inspectors employed to carry out a building inspection, whether on behalf of a purchaser or vendor ( please note agents can only recommend and not refer) at all times, must carry out that inspection inaccordance with the Australian Standard (AS 4349.1). It forms a legal dcoument on behalf of the person/s who has instructed the property inspection to be carried out and whom is named on the report as the owner of that document.

    Any fraudulent property inspection report is not only a criminal offence but the validity and legal responsiility of any property inspection carried out, falls solely on the shoulders of the building inspector.

    To say that agents “pay particular attention to recommending building inspectors that just skim the surface and do not write comprehensive reports, so it does not affect the sale of the property”, is nothing but slander and is not based on any material facts – It is pure here say by the writer.

    In closing, to put all readers minds at ease, in the Discussion Paper Review of Conveyancing ( Sale of Land) Regulation 2005 here in NSW, it was discussed that if pre-sale inspection reports were to form part of vendor disclosure, that the validity of those reports be time limited?

    For example, 3 months after the preparation of the report? Consideration should be given to a scenario where a fault arises after report is prepared but within the 3 month period, for both pest and building issues.

    See below link for that Discussion Paper

    http://www.lands.nsw.gov.au/__data/assets/pdf_file/0011/125984/P10_16_003__conveyancingV2.pdf

    Comment by George Rousos — May 31, 2010 @ 2:34 pm

  15. My apologies for the long winded comment but it may contain some helpful information.

    I suggest that if anyone would like to do a study (perhaps Property Investor Magazine) of the way building reports are formatted and you will notice there is a vast difference in the way reports are written in all areas of Australia. Have half a dozen building inspectors do a report on one property and see how acurate and informative they are. You will find reports vary from light, general statements covering the property to professional acurate ones that report on everything. No two are the same yet are acceptable under the same Australian Standard.

    The Australian Standard for building inspections only represents a base line for reporting standards and does not require a building inspector to write an all encompassing report. That is up to the inspector and his level of professionalism and respect for their clients.
    The Australian Standard is written in a manner where the building inspector does not have to comment on minor defects, swimming pools, drainage, plumbing, electrical, appliances, air conditioners, asbestos content, smoke detectors, unapproved additions and many other areas. 33 specialist areas in all, and more areas are exclusions from the Australian Standard that most people dont even know about.

    The inspector is only required to walk around and through the property and visually report on defects in accessible areas and they are only obligated to comment on structural defects not collectively report on minor defects. They do not have to touch or move anything and cannot probe or damage the vendors property in any way. There can be a great deal of hidden damage / costs with a walk through structural only type report compared to a genuine comprehensive one even though the walk through still meets the Australian Standard.
    Should you wish to do a history / license check on building inspectors this can be done via sites such as the BSA in Qld and bodies in other states. In Qld the license history only covers building inspectors that have had directions made against them by the authority. Unfortunately this information is not completely accurate as building inspectors can have action taken against them in a court of law and this does not get recorded on the authority site so there is no real way of the authority site providing accurate information on the past history / claims made against building or pest inspectors or their past preformance so the general public can know how good or bad they actually are. We have common industry knowlege and experience of multiple claims made against inspectors and there is no record on authority web sites.

    I have been involved in the building inspection industry for fifteen years and we have inspected over 15,000 properties in our area and dealt with more real estate agents that most people would do in a lifetime. We have always provided acurate comprehensive reports and our clients are genuinely happy with our information and service. The common word between some real estate agents in our area is that we are the worst building inspectors due mainly to the fact that we inform our clients about every aspect of the home even pointing out minor defects, areas that may need to be checked for approval such as the home, pools and unapproved additions. We only provide accurate reports that give a overall indication of the condition of the property and they are in no way worded to discriminate against the property in any way.

    Statements about being the worst building inspectors made by agents due to the comprehensive nature of our reports have been relayed to us by other agents, vendors and purchasers. One time it escalated to a point where slanderous comments made about our company have even channelled through to my wifes workplace where I was going to inspection on a home for one of her work associates. We have had to indicate to the particular agency principal that if these comments continue they will have legal action taken against them.
    The main problem for agents is that certain building inspectors produce reports that are too accurate and informative and this can jepodise the sale of the property.

    Building / Pest Inspections is one of the only jobs where when you produce a report of highest professional standard you dont get referal from the majority of the market base eg agents. Building Inspectors rely on business referal just the same as anyone else and if there is a way to gain constant agent referal by producing reports that do not cause problems with the sale of the home then there are persons out there that will do exactly that. This is not heresay it is common knowlege and industry experience.

    We met an agent on a recent job and they commented on the last home we were on. It was on a sloping site and the floor slab was 70 mm out of level tilting down the slope of the site with other indications of movement and cracking on various areas of the home all supported by a poorly constructed retaining wall. Doors throughout the home were out of alignment and even one brick wall had been replaced and was a different type of brick. It wasnt too hard to spot as you walked downhill from the entry to the back of the living room wall across the width of the home. Our client was happy that we had previous knowlege of the fault in the home. The agent then went on to tell me that they sold the home to someone else and another building inspector did not pick the fault up. I feel sorry for the new owner as they are unaware of a foundational settlement problem and a very costly repair. We know this because we inspected the home several years before and had prior knowlege of the fault and a specialist report indicating works involved at that time. We relayed this on to our most recent client.

    I have experienced the attutide of agents in regards to building / pest inspectors for longer than most and the above mentioned examples are from personal experience and we are certainly not suggesting all agents act in the manner .
    I have no agenda against agents personally but if you feel that the industry is squeaky clean then you might want to take another more detailed look or just turn on Current Affair.

    I am commenting on facts and industry experience not heresay.

    Best advice for getting a building report is do you research ask the building inspectors what they specifically check, how much time they spend on site and go for one that has extensive industry experience and a thorough comprehensive report. Meet them on site and check their work and address any concerns you have. Be sure to read the fine print on Building Inspection Agreements and Reports so you know where you stand should anything go wrong. Disclaimers are written by professional indemnity insurers not by the Australian Standards. If your name is not on a Building Report or Inspection Agreement then you have no come back if you purchase a home with anything other than your personal report.

    Comment by PB — June 3, 2010 @ 1:37 pm

  16. THIS COMMENT HAS COME PRIVATELY TO ME FROM ANOTHER QUEENSLAND BUILDING INSPECTOR:

    I am a building inspector on the Sunshine Coast and have been a resident / builder for 30 years the last 15 being involved in the building inspection industry.

    Some of the issues I have encountered may help you add or put a different slant on the disclosure side of things.

    Firstly I would not buy a property relying on a building report from a vendor. In most cases you will find that if the agent organizers it you will have a report that says practically nothing and would only report on the structural aspect of the home. Agents pay particular attention to recommend building inspectors that just skim the surface and do not write comprehensive reports, so it does not effect the sale of the property. Personally I don’t believe that a real estate agent should not be able to recommend building and pest inspectors. Even though they recommend three in most cases they are the three softest inspectors in the area. Some building inspectors particularly tailor their reports to not say anything. We have read many over the years that only comment on the structural aspect of the home when there is thousands of dollars worth of work in other areas.

    All building reports have third party disclaimers so if a person purchases a property relying on the vendor building report they will not be covered under the inspectors insurance so they have no come back.

    Building and pest reports have time limits and if the home is on the market for some time they may no be applicable.

    The BSA legislation covering building inspectors would have to be one of the biggest jokes in the industry. The BSA as a watchdog have license checks available on their web site to inform the general public if there a particular contractor has had any disputes lodged against them. This does not work as most litigation against building / pest inspectors is done via the courts and it is not registered or recognized on the BSA site. I personally know of many cases where building and pest inspectors have been sued multiple times even in one year and the BSA and the general public knows nothing about it.

    As recently as today I had a real estate agent say that they met me on a job last year. This home I inspected last year had footing and slab subsidence up to 60 mm out of level in the living room and visual areas where subsidence / cracks had been covered. The agent was happy to tell me that another building inspector came along and found nothing wrong with property and it sold. I was always under the impression that the real estate agent had an obligation to disclose this information that they gained via our inspection to any future potential purchasers.

    I am all in favor of having homes sold that are fully compliant however in our area local council records do not go back more than 10 years in some cases. Most building inspectors don’t specifically point out to their clients possible changes or unapproved additions. We do and we also write a disclaimer against unapproved additions. We had a client that purchased a home in the local area. We alerted him to the fact that there may be an unapproved roofed patio addition on the back of the home. He checked with the local council and they told him there was no building records available. Three years after he purchased the home the local council issued him with a compliance notice telling to have the roofed patio approved or remove it. I still cant figure that one out. So you can see that are flaws even in compliance checks.

    If anyone really wants to make an impression and level the playing field to protect consumers the only way to do it is to produce an Australian Standard that fully protects the person buying the home. It should be a standard that applies to all Building and Pest Inspectors so that all reports have the same format and building or pest inspectors are to write about structural faults as well as collectively report on minor defects and identify and possible unapproved changes or additions.

    I have raised my concerns with the Housing Minister. His reply was probably much the same as Garrets was to the insulation debacle. He sent me a letter acknowledging my letter. That was five years ago and no communication at all. Although we have a new building inspection standard introduced last year it has done absolutely nothing to change the industry and get rid of the unprofessional element.

    The same government thing happened when I was electrocuted in a ceiling with foil insulation approximately 4 months ago before they started running for cover. The government insulation department would not even look into my complaint unless I could name the contractor. The vendor would not give me the contractors name for fear of stopping the sale of their property. I put it to them that I would provide the address of the property and they could track who the contractor was from the payment of the grant made to them. They would not do this. In the end I raised my concerns with the government electrical standards department some time later. They said they would look into it immediately. I have not had any communication since.

    Hope some this information helps raise the standard

    Comment by Tim O'Dwyer — June 3, 2010 @ 3:14 pm

  17. In response to comment 12

    If any agent or building inspector for that matter was foolish enough to either botch a building report or as you say skim the surface, this would be completely absurd, because there negligence would come back to bite them and simply result in a lawsuit filed.

    Further, if say I wasn’t going to rely on a vendor’s building report and decided to organise my own, what are the chances of me discovering that a vendor’s report was either botched or fraudulently prepared by either the agent or the building inspector involved??

    I would say my chances of detecting the fraud, would in fact, be pretty high.

    Comment by George Rousos — June 4, 2010 @ 2:58 pm

  18. What’s needed is a standardized inspection undertaken by approved bodies so that we all understand what that inspection covers and what constitutes an acceptable outcome.
    e.g.

    AS 4349.1-2007
    Inspection of buildings – Pre-purchase inspections – Residential buildings. I believe this standard has some way to go but conceptually goes to removing the inherent bias that a non standardized inspection has the potential to introduce.

    Comment by Marianne Robinson — June 27, 2010 @ 2:39 pm

  19. As buyers Agent, we have seen building and pest reports which have been supplied by the sellers and we always recommend that our buyers have their own done. On more then one occasion now we have had the inspection done and our inspector found things that were not on the sellers report. If you do not know or understand what a buyers Agent can do for you when buying Real Estate may I suggest you read the article in the API on Buyers Agents.

    Comment by Hot Property Specialists Buyers Agency — July 13, 2010 @ 10:07 pm

  20. Buyer beware alright! There is no way I would purchase a property based on a report supplied by the vendor or the agent. I would have thought this was common sense!

    Comment by Lisa — August 3, 2010 @ 9:22 am

  21. In the ACT, the legislation gives the purchaser a direct right to sue the report author in circumstances where loss has been suffered as a result of any materially false or misleading statement or content in a report.

    If in the future, a vendor be required to provide pre purchase reports to a purchaser in NSW, a similar provision of this kind will have to be adopted to overcome the issues that arise in a such a case.

    You find in the review papers, this has been included.

    Comment by George Rousos — September 27, 2010 @ 3:12 pm

  22. The last two comments demonstrate that it works in the ACT, and that is the model that should be used – end of story.

    Comment by Steve — October 1, 2010 @ 10:18 am

  23. It would be my advice to the Australian Environmental Pest Managers Association (AEPMA), that they read the discussion papers first before making comment on the Government’s proposal.

    http://www.lpma.nsw.gov.au/about_us/publications/exhibition/discussion_papers/?a=131350

    Comment by George Rousos — October 1, 2010 @ 12:20 pm

  24. I’m not sure if sellers should be obligated to provide a mandatory building inspection report,
    however, I do believe, if sellers do provide one, it helps increase their chances of selling
    their property quicker and possibly for more. Assuming we ignore, marketing and pricing.

    Why? by providing an independant building and pest inspection report you instantantly,
    remove an important element of doubt in the buyers mind, “is the property structually sound
    and free from pests?”

    Not many buyers can afford to organise a pre-sale inspection on every property they are interested in, its simply NOT feasible for many, by having one already in place for them, you
    not only save them them time and money but you also bring them one step closer to buying your property.

    The argument that if the seller organises the building report, that it may be flawed. I don’t agree with this statement. All good building and pest inspectors, should not only carry an indemnity policy, but they also understand falsifying pertinent information can cost them their licence. A good inspector won’t dare to play around with any report no matter what relation they have with the seller.

    Comment by Steve Basin — October 4, 2010 @ 4:00 pm

  25. Living in both the Gold Coast and in California I think Queensland can learn a bit from the disclosure rules in the US, particularly California. Basically the vendor must disclose any and all known defects and the agents must do their own inspection and disclose anything they discover.

    The purchaser, on the other hand, has the opportunity to obtain a professional building or termite inspection. Or any other inspections they deem important. Once these have been done the vendor has the option of making all or some of any requested repairs. If less than all the purchaser has the option of proceeding or withdrawing.

    I’ve done that in Surfers Paradise and the cost of the inspections was negligible compared to the cost of the building.

    I call this a low tech solution to a low tech problem!

    This has saved numerous lawsuits for undisclosed defects..

    Comment by Robert Binkow — November 11, 2010 @ 3:27 pm

  26. I am currently in the market and looking at purchasing a property in Cairns, Queensland. Although Cairns was spared any major effects from Cyclone Yasi I don’t completely trust the sellers or their agents.

    I doubt that I will get the honest truth and without the seller or agent having to provide building reports I will have no choice but to get my own done. Its another expense as a buyer however I intend to factor these reports into the price that I offer.

    Its about time the Queensland Government got serious on disclosure rules.

    Comment by Shane Norman — February 17, 2011 @ 9:25 am

  27. I think there has to be a way for the seller to cover the costs of a verifiable, independant pest and building inpection.

    I’m a first home buyer who has just paid a total of $1100 for building and pest inpections on 2 houses, both of which have showed termite infestation / damage and structural issues. With every failed inspection I’m going to end up with a smaller deposit for the house I’ll eventually end up buying.

    I’d be happy to take on the cost of the inspection from the seller once a contract goes through.

    Why should so many buyers waste their hard earned money checking out properties that the seller & agent most likely know have issues?

    Both the properties I made offers on had had prior contracts fall through ‘due to finance’ – I now suspect it was due to building inspections.

    Even if the seller wasn’t aware of the problems they now have a free copy of a building and pest inspection I’ve paid for, as the agent has to provide proof of termite activity or structural damage for me to break the contract.

    Doesn’t seem fair. Why should I be penalised for wanting to buy a property that looks good, but has undisclosed issues?

    I believe that professional inpectors wouldn’t doctor reports for fear of losing their reputation / license.

    Perhaps legislation could be written whereby the seller HAS to provide independent pest and building inpections to potential buyers? If the seller’s inspection misses major items such as active termites and structural damage and the buyer conducts an independant inspection that picks up these issues and the contract falls through, the buyer’s inspection costs are reimbursed by the seller? That would possibly make sellers take more responsibility for the condition of their properties and may possibly result in more realistic asking prices, quicker contract turnover times, less failed contracts and a healthier industry. Dodgy inspectors / agents / sellers would be weeded out quickly.

    Wish me luck with property #3… it will cost another $550 to check it out :o(

    Comment by Dave Turner — November 24, 2011 @ 12:08 am

  28. My partner and I put an offer on a townhouse in New Farm only to discover days away from settlement that the entire complex had no building approval nor a certificate of classification required under fire safety legislation. And when we offered the vendor a chance to rectify by extending settlement, he declined, considered us in breach of contract as it was already unconditional. We now have a legal battle ahead to get our deposit back. The vendor has re-listed the property at $5,000 less the price we offered him so as to dupe another buyer. I read your article and agree that Queensland needs to change its laws regarding vendor disclosure. It leaves buyers vulnerable to exploitation with no legal recourse. A sympathetic letter from a Minister just doesn’t cut it.

    Comment by Shico Nimo — February 27, 2012 @ 11:09 am

  29. The onus should exist on both the seller to disclose relevant information and due diligence should be followed on by the buyer.

    Comment by Michael — March 2, 2012 @ 9:49 am

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