When you inspect a property you won’t necessarily test every built-in electrical, plumbing and gas appliance in the property. And you certainly can’t check that every electrical and communications wire and plug and plumbing and gas pipe is in safe working order and complies with regulations. Therefore, you should request that the contract includes a condition with the following features:
- The Seller warrants that these items will be in good, safe working order and comply with all applicable regulations at settlement.
- The Buyer can send a trade person or building inspector to the property before settlement to check whether the condition has been complied with and prepare a report on any defects.
- If the report states that any items are not in the required condition, the Seller must either fix them before settlement to the Buyer’s reasonable satisfaction or allow a discount off the purchase price of the quoted cost of fixing them.
Some issues around including this kind of clause in the contract are set out below. (These are the same issues that arise in relation to conditions about building defects and destructive timber pests):
- The Seller may not be prepared to take the risk of an unknown liability for repair costs. Sometimes the Seller will accept the clause only if it also says that they may terminate the contract if they do not agree to pay the repair costs and you do not withdraw your demand that they be paid.
- The Estate Agent will prepare the clause unless you give them your own version – which you can get from us for free. The Estate Agent may say their wording is “standard” so you should just accept it. Estate Agents act for Sellers not Buyers. Therefore some clauses they put in contracts; even “standard” clauses prepared by REIWA, may favour the Seller. Who will win the negotiation over the wording of the condition depends on who wants the deal more.
- Never accept a pre-prepared report or the Seller arranging the report, unless it’s at an auction. You can, however, try to have the Seller agree to pay your costs of getting the report. If a trade person engaged by the Seller prepares the report they may have no responsibility to you to you if the report is incorrect, because you were not their client. Ensure that the contract allows a reasonable time for getting the report and negotiating a solution to any issues which it may reveal.
We can give you free, basic legal advice on negotiating the inclusion of special conditions in your purchase contract if you are nominating us to do the settlement.
IMPORTANT: This information is not legal advice. You reading it does not give rise to a solicitor/client relationship with us. It is general information only. It may be affected by the specific circumstances of your situation. You should not act on anything on this website without obtaining specific legal advice from us.