The Importance Of Completing A Pre-Settlement Inspection

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The Importance Of Completing A Pre-Settlement Inspection

When purchasing property, under the fine print in both a standard REINZ agreement and auction agreement clauses 3.2(1) and 5.2(1) provide the right for you - (or a person nominated by you) to visit the property again during the week before the settlement day.

When purchasing property, under the fine print in both a standard REINZ agreement and auction agreement clauses 3.2(1) and  5.2(1) provide the right for you – (or a person nominated by you) to visit the property again during the week before the settlement day.

Inspections are generally organised via the real estate agent, or the vendor directly if you are purchasing privately.   You only have a right to one final inspection, although you could still ask for the vendor’s permission for a further inspection, this would be at the vendor’s discretion. 

If you do identify a problem during the inspection, the vendor should allow you a further inspection so you can ensure it has been fixed.

We recommend you talk to your agent to arrange a pre-settlement inspection at least 2 – 3 working days prior to the settlement date.   The reason for this is that we are obligated in accordance with clause 10.3(1) of the agreement to notify the vendor’s solicitors of any issues at least the working day before the settlement date.

What should you look for?

You have a right to obtain ownership of the property in the condition it was in on the day you signed the agreement, fair wear and tear excepted:

  • Is everything that was in working order still in working order? 

  • Are the chattels or items mentioned in the agreement still at the property?

  • Are the remotes for the automatic garage door and heat pump there?

  • Has anything been damaged (other than through fair wear and tear)?

  • Are all the keys to the property present?

  • Has the vendor completed the works to the property to the standard that was agreed either in accordance with a clause in the agreement or negotiated under the conditional stage?

Our tip

If you are uncertain about what chattels or items are included with your purchase and have warranties regarding their functionality or condition, we recommend you review your agreement prior to your inspection and make note (or take a screenshot of the relevant pages on your phone).

The list of chattels (or items) can be found on Page 18 of the REINZ agreement under the headings Schedule 2 and 3.   If you are purchasing at auction the list of chattels will be described on the front page of your agreement and at times continue into the Further Terms of Sale.

What can you do if there are issues?

Often vendors are still in the property and may be packing with some form of organised chaos, this is nothing to be worried about at the pre-settlement stage.

If the property is vacant but needs a really good clean, there is not a lot of legal options to rectify this unless a professional clean was incorporated as a condition into the agreement for sale and purchase or negotiated at some point with the vendor.  

If you notice a cracked window at the time of inspection but it transpires that the crack was present at the time you entered into the agreement you are deemed to have accepted it and will have no right of remedy against the purchaser for this.

If you identify a problem with the chattels or damage to the home, then you do have options, these are mentioned below in brief and extend well past what is set out here:

  • Talk to us and your agent.

  • If there is minor damage, this does not provide you with the right to not complete settlement on the settlement day.  Often resolution of minor issues are resolved easily as vendors typically agree to rectify prior to the settlement day.  We always recommend you check with your agent to make sure there has not been a misunderstanding first.

  • Even if the deterioration is more than ‘fair wear and tear’ but still only minor, you are entitled to withhold funds on the settlement day until resolution can be agreed.    The general rule of thumb is to request the amount that it may take you to remedy the issues following settlement that is held, for this reason it may be appropriate at times to obtain quotes for this work – we always guide our clients through this process and work with all the parties to achieve the best outcome.

The agreement provides for processes that must be in these circumstances.