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Pre-Settlement Inspection – What To Check

One of the more contentious steps in buying a house is the pre-settlement inspection. Purchasers have a right to inspect the house prior to the settlement date. The pre-settlement inspection is to see that the house is as it was when the agreement was declared unconditional.

It is not uncommon for purchasers to call in alarm at what they find when the vendors move out. Whether it is a pot plant or piece of furniture which was hiding a hole in a wall, or an appliance that isn’t working, or the vendors removing something the purchasers assumed would be left behind.

What to expect at settlement

While the vendor has certain obligations to ensure the property is as it was when the agreement was declared unconditional, there is no general obligation on the vendors to deliver the house clean and tidy. While that might be decent and proper, it is not usually a term of the agreement. All the agreement provides is that the vendor is to deliver the property with vacant possession. It is possible, but unlikely, that mess in a property will be so bad that a property cannot be considered “vacant”.

What to check at the pre-settlement inspection

What ought to happen, in a perfect world, is that a purchaser will inspect a property a couple of days before settlement. At that time they should check that the property has not been damaged since they agreed to purchase, and that the various appliances are all in reasonable working order. Items like garage door openers and spa pools appear to be particularly contentious. This inspection is the buyer’s opportunity to identify defects and ask for them to be fixed.

If you discover any problems at the pre-settlement inspection

Not all defects are required to be fixed. But some defects can be insisted on. A purchaser might well be able to insist that a faulty appliance or broken window must be fixed by settlement or the price reduced by a reasonable sum. However, some issues are simply part of the house which the buyer agreed to buy. For example there is no general right to insist that the lawn is mown or the carpet or oven are cleaned.

Deal with issues before the pre-settlement inspection, where possible

It is important for both vendor and purchaser to consider the property at the time of signing the agreement, and consider if there are issues which need to be dealt with. If a purchaser is concerned that the property is a mess and they want certain things dealt with – for example the garden tidied, rubbish removed or items repaired – then those should be set out in the agreement. If a vendor knows that an appliance is broken or they don’t intend to fix something, then that should be stated too. It is better to be clear when you sign an agreement rather than argue about it after.

Pre-Settlement Inspection Checklist

When you carry out a pre-settlement inspection, these are the general things to check:

  • Vacant possession – have the previous occupants vacated the property? The vendor is required to give the purchaser vacant possession before settlement (unless the property is being sold tenanted).
  • General condition of property – is the general condition of the property as it was when you agreed to purchase?
  • Chattels present and working – floor coverings, window coverings, stove and any other chattels listed in the chattels list should be checked. While chattels need not necessarily be clean, they should be in working order.
  • Repairs or maintenance carried out as agreed – if the vendor agreed to complete repairs or maintenance before settlement, check that these have been completed.
  • No new damage – it’s not uncommon for damage to be caused by moving, so check there are no new holes in walls and doors, for example.

If you discover any problems with the property during your pre-settlement inspection, make sure you call your lawyer immediately, and get the right advice on how to proceed.

Thomas Biss is a director of Henderson Reeves. He also oversees Smart Move Conveyancing, as well as leading Henderson Reeves’ business law team.