What to expect during pre-settlement inspection

[Legionarie]

Hi all,

I have just purchased my first property (ever). I am also new to Australia and rather unfamiliar with many things

The property I bought is currently being lived in by the owners. They will move out before settlement.

I will be doing pre-settlement inspection in a month or so. I know what this inspection is about, but I am unclear about what to expect when it comes to utilities.

In my mental model, when the current owners move out, the house will have:
- no power
- no gas
- no water
- no phone.

BUT after reading the many posts in this forum, which says one should bring a gadget to test the power outlets during pre-settlement inspection, I am beginning to think I am mistaken.

Could someone kindly explain to me how utilities work? Will they remain "on" even after the owners have moved out?

Should I find there is no power or gas or water or dial tone is that a problem?

Thanks a lot!

Legionarie

 

[Peter_Tersteeg]

You'll need to reconnect the utitlties in your name, I'd suggest you do this a few days before you move in.

I don't think there's any point in taking something to test the power outlets. They'll work if the vendor hasn't disconnected them when you do the settlement, and they won't work if the power has been switched off.

If they're still working, you still need to get it put into your name. You don't want to be in there on your first Saturday night, and the power switches off when you don't expect it.

 

[Perp]

Water - generally remains connected. You need to get the meter read on settlement day.

Gas, electric, phone - may or may not remain connected, depending on the vendors. Some people ask for them to be disconnected for fear that they'll receive a bill for your usage, many others just leave them connected provided you've contacted the utility companies to tell them that you'll take over the account from settlement day.

I'd find out who all the providers are, contact them all and arrange for accounts to be in your name from settlement day. If you do this a week or so beforehand, then if/when the vendors ring up asking for disconnection, they'll see that you've already agreed to take over the account and shouldn't disconnect it.

 

[Legionarie]

Thanks for the info!

Perhaps a silly question - am I stuck with whatever gas, power, water providers are currently providing the property? Is that how utilities work?

I guess the question is, should I bother to look for better (cheaper) providers?


Thanks.

Legionarie

 

[oracle]

Unless you already know which utilities companies you wish to use. I would just stay with the current ones. Once I settle into the property and have bit more spare time, I would then consider shopping around and switching companies if I find a better deal.

Cheers,
Oracle.

 

[Jacque]

Power isn't usually disconnected until settlement day, which is handy if you conduct the psi a day or so beforehand to check all is in working order.

The purpose of pre-settlement inspections is to check that all inclusions are intact, as per the contract (check for switches, as these have been known to happen with vendors swapping such items as light fittings, window coverings, pool equipment, appliances being the most common) and the property is more or less (given fair wear and tear) in the same condition as it was when you exchanged contracts. I always suggest that buyers take photos of inclusions, as we do for buyers, and check the property out thoroughly both at buying time and at the psi. Saves a lot of heartache, when you move in only to discover something doesn't work or is missing, or there's a heap of asbestos sheeting you overlooked in the old shed

 

[Perp]

Power isn't usually disconnected until settlement day, which is handy if you conduct the psi a day or so beforehand to check all is in working order.

I'm sure that Jacque knows this, but it seems appropriate to remind everybody at this point that your options are somewhat limited anyway, if you find something not working. Many people seem to mistakenly believe that if anything's not working, they can demand rectification (or costs of repairs) prior to settlement. This is simply not true. (Unless you've specifically included a special condition that the vendor warrants that everything works.) You are only entitled to the property being handed over in the same condition as it was when you contracted to purchase. It's not a "second chance" at picking up things that should have been detected earlier. (ie Prior to going to contract for the property in "as is" condition.)

So if you discover that the oven/dishwasher/ceiling fans etc don't work, you only have any recourse if they worked at the time you contracted, or the vendor stated that they worked. You are not entitled to make any assumptions about what works, or "should" work; properties are sold "as is" (with some legal limitations).

Yes, you may use the fact that the vendor is keen to achieve settlement as leverage in asking them to repair something, but they're not obligated to repair things that you first detect at PSI under the contract. Such a tactic would be unethical, IMHO, if you were simply slopping in doing your inspections prior to going to contract. The vendor has no obligation to repair things under the contract; you'd simply be seeking to amend the contract in your favour at the last minute. It's no different to saying an hour before settlement, "we're only willing to settle on time if you drop the price by $2K".

I'm not accusing any individual of having done any of this, I've just learned - the hard way - that most real estate buyers way overestimate the level of protection offered by the "standard contract".

 

[ianvestor]

Even IF the vendors specifically call up to 'disconnect' the electricity, all that usually happens is that the power company agrees not to charge them from that point onwards. The power company doesn't in my experience actually disconnect the power. They will more likely send out a letter in the post inviting the new owner (you) to sign up and give a bit of grace period (maybe a week) before actually cutting it off.

In addition, I think there might actually be laws surrounding this, because electricity may be needed in an emergency. Or maybe I'm just thinking of the phone line...

 

[Jacque]

I'm sure that Jacque knows this, but it seems appropriate to remind everybody at this point that your options are somewhat limited anyway, if you find something not working. Many people seem to mistakenly believe that if anything's not working, they can demand rectification (or costs of repairs) prior to settlement. This is simply not true. (Unless you've specifically included a special condition that the vendor warrants that everything works.) You are only entitled to the property being handed over in the same condition as it was when you contracted to purchase. It's not a "second chance" at picking up things that should have been detected earlier. (ie Prior to going to contract for the property in "as is" condition.)

So if you discover that the oven/dishwasher/ceiling fans etc don't work, you only have any recourse if they worked at the time you contracted, or the vendor stated that they worked. You are not entitled to make any assumptions about what works, or "should" work; properties are sold "as is" (with some legal limitations).

Yes, you may use the fact that the vendor is keen to achieve settlement as leverage in asking them to repair something, but they're not obligated to repair things that you first detect at PSI under the contract. Such a tactic would be unethical, IMHO, if you were simply slopping in doing your inspections prior to going to contract. The vendor has no obligation to repair things under the contract; you'd simply be seeking to amend the contract in your favour at the last minute. It's no different to saying an hour before settlement, "we're only willing to settle on time if you drop the price by $2K".

I'm not accusing any individual of having done any of this, I've just learned - the hard way - that most real estate buyers way overestimate the level of protection offered by the "standard contract".

Exactly Ozperp, and all the more reason to inspect thoroughly at buying time - I also try, with every contract (though unsuccessfully with most) to get a clause included to that very effect ie: "All electrical appliances to be in full working order upon settlement". It saves arguments later on, when I discover things like rangehoods and pool cleaners not operating as they should. Far better to get a clause included, or, at the very least, an email from the agent or seller verifying that all is in working order.

 

[The Y-man]

I guess the question is, should I bother to look for better (cheaper) providers?

You'll probably find in Austarlia that they are a much of a muchness when it comes to pricing etc.

Cheers,

The Y-man