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Sellers may be required to provide pre-purchase inspection reports in NSW

Struggling home buyers will appreciate the NSW government's recent proposal to force sellers to attach a pre-purchase inspection report to property contracts. There is nothing worse than paying for one or more strata, pest or property inspections only to find that you are outbid for a property.

Buyers can spend thousands of dollars on such reports before they settle on their home. Their resentment is greater in a rising market because underquoting sales prices can make their efforts and expenditure pointless.

While these measures may improve housing affordability and streamline the buying process, legislators need to ensure strong mechanisms are in place to protect purchasers from unscrupulous vendors and building and pest experts.

Buyers need to ensure they read the fine print in such reports carefully. Reports that contain extensive qualifications and limitations on liability can be meaningless and won't be worth the paper they are written on. Furthermore, many inspection reports can be limited to visual inspection of accessible areas only which leaves the purchaser responsible for what lies underneath and many deny a purchaser the right to make a claim against the inspector.

In order to stamp out these practices, the NSW government needs to do three things:

  1. Require pre-purchase property inspectors to meet Australian Standards;
  2. Ensure that the inspectors are insured to cover purchasers
  3. Set out standard warranties that must be made by inspectors and vendors and provide statutory remedies for purchasers if an inspector is negligent, makes misleading or deceptive statements or omits anything from a report.
If there are meaningful protections for buyers then the NSW plan could make buying a home or an apartment much easier. The alternative could be that purchasers are lulled into a false sense of security.


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Written by Shine Lawyers. Last modified: September 3, 2015.

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