What to expect at a pre-settlement inspection

A pre-settlement inspection is your buyer’s opportunity to inspect your property before the final payment is made. These inspections are not compulsory, but buyers usually want to use the opportunity to check nothing untoward has happened to the property since they signed the contract.

  • 2 October, 2019
  • RESIDENTIAL
  • settlement-inspection

What is a pre-settlement inspection?

A pre-settlement inspection is your buyer’s opportunity to inspect your property before the final payment is made. These inspections are not compulsory, but buyers usually want to use the opportunity to check nothing untoward has happened to the property since they signed the contract. It also reassures the buyer that you as the seller have addressed any specific conditions that were included in the contract or agreed on when the deposit was paid.

In a nutshell, buyers are entitled to ensure the pool hasn’t turned green, the lawns and garden haven’t died and that you have haven’t removed the curtains and carpet.

What do buyers look for during pre-settlement inspections?

Most of the time buyers, are pretty excited about their new purchase and are just wanting to get a feel for their new home.  Often, they want to measure up spaces for their furniture or to work out what colour to paint the walls.  

However, there are some buyers who can be a bit fussier who will go over the property with a fine tooth comb.  The most common things buyers have the right to check include:

  • All appliances included in the contract are in working order.  This varies for every buyer, but it may include checking:
  • The hot plate, oven, grill and extractor fan
  • All lights work including the bathroom heat lamp
  • The power points
  • The air conditioning and heating
  • The dishwasher
  • Smoke alarms
  • Garage door remote
  • The alarm system
  • The pool pump
  • The watering system
  • The properties plumbing is in working order including:
  • Toilets flush
  • Sinks drain properly and don’t leak
  • There has been no damage or deterioration since the contract was signed
  • All items included in the contract such as fixtures, appliances curtains etc are still in the property.  Of course only items included in the contract or negotiated as part of the sale need to be left in the property.
  • All agreed repairs have been carried out
  • All the rubbish has been removed and nothing is preventing them from taking vacant possession
  • Buyers may also ask to be shown:
  • Where the hot water system is
  • Where the gas and water meter are located
  • How to turn on the pool filtration, hot water systems and alarm panel
  • And request copies of appliance operations manuals

When is the pre-settlement inspection completed?

The pre-settlement inspection is usually conducted one week before settlement day, but in some cases,  it may take place a day prior to settlement. The advantages of doing this a week out, is that it allows you enough time to fix any outstanding issues that you may have missed or not have been aware of.

How many pre-inspections can the buyers do?

General conditions states that a buyer can complete one inspection, therefore if they are bringing along tradespeople it is up to them to coordinate the relevant tradespeople to attend the one inspection.

Buyers are allowed one further inspection if they identify items that require rectification.

Who can attend the pre-settlement inspection?

We will attend the inspection with the buyer.  They often ask if you can also attend the inspection as it’s a good opportunity to run through how the property works.  However, it is up to you as to whether you attend or not.

What happens if the buyer finds some issues?

If the buyer claims to have found new damage or deterioration, it doesn’t necessarily give them the right to withhold on settlement.  They must prove that the damage breaches the conditions stated in the contract of sale.  Deterioration may just be a result of wear and tear or the buyer may have missed it before they signed the contract.  

If, however there is significant new damage to the property, you may in breach of the contract and may be required to repair the issues before settlement.  Your conveyancer or solicitor is the best person to talk to here.

LJ Hooker NZ

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