Building and pest inspection problems

For some years now, there have been problems with building and pest inspections - as they apply to residential property contracts.

The chief problem with building and pest inspections can be simplified and described in one sentence:

The problem is stress between buyer and seller caused by a building inspector's list of alleged "defects".

It is commonly thought that the best method to resolve this is by better contract conditions.  In reality, attempts to use legal wording to solve the problem only makes things worse.  To illustrate:

(1)       The best example, and the contract condition most commonly suggested, is a "structural faults" clause.  With this clause, a buyer is permitted to inspect the property ... and discover every minor defect that the property has ... and receive recommendations from the building inspector about how much it will cost to fix the defects ...

 - BUT -

... after receiving all this information and these warnings,  the Buyer is only allowed to cancel or take any steps if the written report records "structural" defects.

 (2)      To feel the emotional and practical effect of this - consider the analogy of buying a second hand car from a car yard.  Imagine the car yard included terms in its contract that the Buyer could have the car inspected (eg by RACQ) ... and could learn about everything wrong with the car ...

 - BUT -

...could only complain if the car had major "structural" defects (eg missing wheels, or a missing engine)

Clearly in the case of buying the car, the Buyer would feel duped.   It wouldn't matter if the contract terms were clearly described to the Buyer.   The warnings from the inspection (eg from RACQ) would "put the wind up" the Buyer ... and the Buyer would likely seek ways to improve their position.

A clever lawyer might allege, for example:  misrepresentation, collusion, fraud ...

(3)       The same emotional and practical effects also apply to property transactions ... namely that a Buyer would very likely feel duped ... and seek ways to improve their position.

These might include (for example):  cancellation using a finance condition, cancellation for a technical breach, allegations of misrepresentation, and so on.

What is the best possible solution ?  The answer, we suggest, comes from the car-yard analogy.  Some car-yards obtain inspections on their vehicles, prior to sale, from a reputable third-party inspection company.   When the vehicle is sold, the defects with the vehicle are clearly defined, and displayed.   No stress can be created by a new inspection.

Are there other solutions ?  A seller might instruct their agent that intending buyers may obtain building inspections prior to making an offer ... and that no offers will be entertained that are still conditional on a building inspection.  Actually ... this method of purchase is closer to the approach taken in other Australian States.

Are there any other solutions ? We would dearly love to hear from you with any other solutions that you might have to this problem.