Buying a property is a significant commitment, and many buyers want to make sure the property does not have serious building defects or pest problems before proceeding.
One way buyers may seek protection is by making an offer or Contract of Sale subject to a building and pest inspection.
This type of condition can give a buyer an opportunity to have the property inspected before becoming unconditionally committed to the purchase.
However, the exact wording of the condition is very important. Buyers should understand what the clause allows them to do, when the inspection must occur and what happens if an issue is identified.
This article explains what “subject to building and pest” means in Victoria and what buyers should consider before signing a Contract of Sale.
What Does “Subject to Building and Pest” Mean?
A property purchase that is subject to building and pest generally means the contract contains a condition allowing the buyer to arrange a building inspection and/or pest inspection within a specified period.
The buyer may have certain rights if the inspection identifies particular problems.
However, the rights available to the buyer depend entirely on the wording of the contract.
A building and pest condition should therefore not be treated as an automatic right to cancel a contract simply because the buyer is unhappy with the inspection report.
Why Do Buyers Get Building and Pest Inspections?
A property may look perfect during an open inspection, but some problems may not be obvious.
A professional inspection may identify issues such as:
- Structural concerns
- Water damage
- Roof problems
- Dampness
- Poor workmanship
- Termite activity
- Timber pest damage
- Other building defects
An inspection can give a buyer additional information before proceeding with the purchase.
What Does a Building Inspection Check?
A building inspection generally focuses on the physical condition of the property.
Depending on the inspection service and report, it may consider areas such as:
- Roof and roof space
- External walls
- Internal areas
- Floors
- Ceilings
- Doors and windows
- Visible plumbing issues
- Drainage
- Signs of water damage
- Structural components
- Other accessible areas
The scope of an inspection depends on the inspector and the service engaged.
Buyers should understand what is and is not included in the inspection.
What Does a Pest Inspection Check?
A pest inspection is generally focused on evidence of timber pests and other relevant pest activity.
It may identify:
- Termites
- Timber pest damage
- Evidence of previous pest activity
- Conditions that may increase the risk of future infestation
A pest inspection is different from a general building inspection.
For this reason, some buyers choose to obtain both inspections.
Does Every Property Need a Building and Pest Inspection?
Not necessarily.
Whether an inspection is appropriate depends on the property and the buyer’s circumstances.
For example, a buyer may consider an inspection particularly important for:
- Older homes
- Timber properties
- Properties with visible defects
- Properties with previous renovation work
- Properties in areas where termite activity may be a concern
- Properties where the buyer has concerns about the condition
Even a relatively new property can have defects.
What Does a Building and Pest Condition Usually Include?
The exact wording varies between contracts.
A condition may specify:
- The type of inspection required
- The timeframe for arranging the inspection
- Who can conduct the inspection
- What happens if defects are identified
- Whether the buyer can terminate
- Whether the buyer can negotiate repairs or other arrangements
Before signing a Contract of Sale, buyers should consider obtaining a contract review so they understand the building and pest condition and other important terms. The wording of the condition can significantly affect your rights if an issue is identified.
Can I Cancel the Contract If the Inspection Finds Problems?
Not necessarily.
This is one of the most important points for buyers to understand.
Finding a defect does not automatically mean you can cancel the contract.
Your rights depend on the actual wording of the contract.
For example, a clause may only allow termination if certain types of defects are identified or if the cost or seriousness of the defects meets a specified threshold.
Other contracts may provide different rights.
Always read and understand the condition before signing.
What If the Inspection Finds Minor Defects?
Minor defects are common in many properties, particularly older homes.
Examples may include:
- Small cracks
- General wear and tear
- Minor water staining
- Old fixtures
- Maintenance issues
Whether these issues give you any contractual rights depends on the terms of the contract.
You may decide to proceed with the purchase, negotiate with the seller or seek further advice depending on the circumstances.
What If the Inspection Finds Major Structural Problems?
Serious structural defects can be more significant.
If the inspection identifies major problems, contact your conveyancer as soon as possible.
Your conveyancer can review the contract condition and explain the contractual options available to you.
You may also need advice from the building inspector or another qualified professional about the nature and likely cost of the problem.
Can I Negotiate the Purchase Price After the Inspection?
That depends on the contract and negotiations with the seller.
A buyer may ask the seller to:
- Reduce the purchase price
- Carry out repairs
- Agree to another arrangement
However, the seller does not necessarily have to agree.
Your conveyancer can help explain your contractual position, but negotiations will depend on the circumstances.
When Should I Arrange the Inspection?
If the contract contains a building and pest condition, arrange the inspection as soon as possible after the contract is signed.
Do not leave it until the final day if it can be avoided.
The inspection needs to be completed within the timeframe specified in the contract.
If you are concerned that the inspection may not be completed before the deadline, contact your conveyancer immediately.
Who Pays for the Building and Pest Inspection?
Generally, the buyer arranges and pays for their own building and pest inspection.
The cost depends on:
- Property type
- Property size
- Location
- Inspection company
- Scope of the inspection
It is worth considering the inspection cost as part of your overall purchasing budget.
Should I Get a Building Inspection for an Apartment?
Apartments can still have building issues, although the inspection considerations may be different from those for a standalone house.
For an apartment or unit, buyers should also consider whether the property is part of an Owners Corporation and whether there are broader building or common property issues.
Information about the Owners Corporation may also be important when assessing the purchase.
Does a Building and Pest Inspection Replace Property Searches?
No.
A building and pest inspection looks at the physical condition of the property.
Property searches provide different information about matters such as title, planning, council information and other property-related issues.
They serve different purposes and should not be treated as substitutes for one another.
What Should I Do If the Report Raises Concerns?
If your inspection identifies a potential problem:
- Read the inspection report carefully.
- Ask the inspector to explain anything you do not understand.
- Contact your conveyancer promptly.
- Check the relevant contract condition.
- Consider whether further specialist advice is required.
- Do not allow the relevant deadline to expire without taking action.
Acting quickly is particularly important when the contract contains a strict inspection timeframe.
Common Mistakes Buyers Should Avoid
Assuming “Subject to Building and Pest” Means You Can Cancel for Any Reason
The contract determines your rights.
Arranging the Inspection Too Late
Missing the contractual deadline can create unnecessary problems.
Only Looking at the Building
Pest issues can be separate from building defects.
Assuming a New Property Has No Defects
New properties can still have construction or workmanship issues.
Ignoring the Contract Wording
The inspection clause should be understood before signing.
Waiting Until the Last Minute to Contact Your Conveyancer
If an issue is identified, contact your conveyancer immediately.
Frequently Asked Questions
What does subject to building and pest mean?
It generally means the Contract of Sale contains a condition allowing the buyer to obtain building and/or pest inspections within a specified timeframe.
Can I cancel if the building inspection finds defects?
It depends on the contract. The existence of a defect does not automatically give you the right to terminate.
Do I need both a building and pest inspection?
Not necessarily, but they assess different issues. Some buyers choose to obtain both.
How long do I have to arrange the inspection?
The timeframe depends on the specific contract condition.
Who pays for the inspection?
The buyer generally arranges and pays for their own inspection.
Can I negotiate a lower price if defects are found?
You can ask the seller to negotiate, but the seller does not necessarily have to agree.
Should I get an inspection before signing the contract?
If possible, obtaining an inspection before signing can provide additional information. However, this may not always be practical, particularly in competitive situations. Buyers should understand the contract before committing.
Does the inspection guarantee the property has no defects?
No. Building and pest inspections have limitations, including areas that may not be accessible during the inspection.
How Prox Conveyancing Can Help
At Prox Conveyancing, we help Victorian buyers understand the contractual aspects of purchasing property subject to building and pest inspections.
Before signing a Contract of Sale, we can review the relevant conditions and explain the contractual requirements.
If an inspection later identifies a concern, contact us promptly so we can help you understand the relevant contract provisions and your options.
About the Author
Meet Sally
Sally Kwok is a Licensed Conveyancer and the Director of Prox Conveyancing. With more than 16 years of experience in the conveyancing industry, she is committed to helping buyers and sellers navigate Victorian property transactions with confidence. Sally is passionate about providing clear communication, practical guidance and personalised service throughout every stage of the conveyancing process.
👉 Learn more about Sally on our About page.
About Prox Conveyancing
Prox Conveyancing is a Victorian conveyancing practice providing professional conveyancing services for residential property transactions across Victoria. We assist buyers, sellers, investors and families with a wide range of conveyancing matters, delivering personalised service, transparent communication and professional support from contract through to settlement.
👉 Learn more about Prox Conveyancing on our About page.
This article provides general information only and is not legal advice. Every property transaction is unique, and the information above may not apply to your particular circumstances. If you require advice about your specific situation, please contact a qualified legal professional or licensed conveyancer.