The Inspection Clause explained

The standard form Contract for Sale in Tasmania includes an Inspection Clause that buyers can use if they want to have a building inspection carried out.

Buyers need to note a building inspection period and a defect limit. Typically, buyers allocate a window of seven to ten days for the inspection period and set a defect limit of one to two percent of the sale price.

If defects in buildings and other improvements on the property are detected, and the buyer wants to end the Contract under the Inspection Clause, they need to serve on the seller or the seller's lawyer, a copy of a report by a qualified building inspector or a licensed building services provider specifying the defects and certifying such defects are likely to cost more than the defect limit to remedy.

Choosing a lower defect limit is generally more advantageous for the buyer, as it is easier for them to reach the defect limit and have grounds to end the Contract under the Clause.

It is essential that the report certifies that the defects are likely to cost more than the defect limit to remedy, otherwise the buyer will not be able to end the Contract. We recommend checking with your building inspector that they are able to provide you with this if required, before you engage their services. Not all do.

If no notice is received within the building inspection period, the benefit of the Clause will automatically waive.

Common misconception

One common misconception among buyers is that the defect limit represents the amount sellers are obligated to contribute towards fixing any detected defects. However, this is not the case. Sellers are not legally obliged to perform any repairs or cover associated costs. The only available option, as outlined in the Inspection Clause, is to terminate the contract.

Nevertheless, it's worth noting that sellers may choose to undertake repairs or provide a price reduction as a goodwill gesture, especially if the defect was not easily noticeable. While it is not mandatory, some sellers might be open to addressing the issue in order to maintain a positive buyer-seller relationship.

Why use a building inspector?

It is an inspectors' responsibility to make sure a building is structurally sound. They can identify any problems with design, building materials, or construction techniques and offer a resolution.

Employing a building inspector to carry out an inspection will guarantee you peace of mind with your property purchase.

You will only be able to rely on your report to end the Contract under the Inspection Clause if your report was prepared by a qualified building inspector or a licensed building services provider.

If you have not already organised an inspection report, we recommend you contact one of the inspection companies that have proven reliable for our clients...

All material on this site is provided for information purposes only. The contents do not constitute legal advice, are not intended to be a substitute for legal advice and should not be relied upon as such. You should seek legal advice or other professional advice in relation to any particular matters you or your organisation may have. If there are any issues you would like us to advise you on arising from this material, please get in touch.

Please be advised that we do not profess any knowledge of building matters. You must satisfy yourself that the report you obtain is satisfactory.