Building inspection results

From: Cathy Baxter


Have made an offer on property subject to building, pest inspections and finance.

Building inspection came back with about $5K (land & buildings valued @ $132K this is not a hugely expensive property) of repairs required plus the lack of compliance to fire safety - it is an old duplex.

How would i go going back to vendor and asking for repairs to be done or cash back on settlement for value of repairs?

How bad does the building inspection need to be to refuse to purchase?


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Reply: 1
From: Asy .

Hi Cathy,

(Firstly, sorry, for all those litigious types: this is my opinion only, and does not constitute legal advice, please consult your solicitor.)

Depending on how your contract was written, the building inspection generally only has to be 'not to the purchasers approval', which means that you only have to say that you are not happy.

You can go to the agent/vendor and take the building inspection and try to negotiate to re-contract with them, but you will probably be told that these repairs were known and were taken into account when the price of the property was set (at least that's what I used to do!). The lack of compliance to fire safety is of interest, does it not comply to the safety regs that are in force now, or does it not comply to the safety regs which were in force when it was built, as I believe that this will make a difference.

Assuming your contract was written such that the building inspection only has to be to your satisfaction, you can withdraw. The other thing to remember, is that you can always "fail to secure finance".

My suggestion would be to: Go to the agent and tell them that you have received your building report, and that the items mentioned are safety repairs and therefore cannot be done without, however, your personal finances do not allow for these repairs, and your financier will not allow you to add these expenses to your loan, as there is too high an lvr. (At no time do you ever have to disclose the true nature of your finances). So even though you really want the property, and you would be almost positive your financier will loan you the original price, you will have to withdraw from the sale, unless he can go to the vendors and have them either, reduce the price, or offer a cash-back at settlement. But do this really quickly, before your finance clause runs out, and it may be a good idea, just for safety, to have your solicitor write to the vendor's solicitor to request an extension to the finance clause until all this can be sort out.

The only other thing I will say is: do you really want to end the contract? What will you do if they say no, will you take it a it is? Have you done the figures with this additional cost? Do they still stack up? You need to decide whether you will take it as it is, or whether you will run if they don't come to the party. And you really need to decide this before you go to see the agent, so that you are set in your decision, and not wavering, as he will sense that and act accordingly.

Good luck, let us know how it goes!

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Reply: 1.1
From: Cathy Baxter

Thanks for your reply Asyral. We don't have a contract yet as we made our offer dependent on the things i first mentioned. So nothing is in writing. It really is true that we don't have the cash for repairs - but it is a really great cash flow buy so within a few months we'd have the cash from the income to pay for the repairs - not telling them that though.

I like your idea of going back to the agent and telling them we want a new deal. Will try that one, I suspect the vendor will negotiate as it has been on the market with 3 agents and she wants a sale!

So why are we buying it (as it appears no-one else wants it) - the cash flow is great and can be improved upoon returns are something like 15% as is, also we believe we have the experience with this type of property - the units are 4 one bedders which the vendor has 75% renovated. They could be let easily as is and we have a constant source of leads for tenants through our other business or could be completely renovated and used for short to medium fully furnished accommodation for which there is a demand here.

Thanks again

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