Pest and Building Reports: Are they worth the paper they’re written on?

Buying a house is a daunting experience. On top of locating a suitable property, and securing finance, would-be purchasers usually undertake any number of inspections and searches to ensure that they are making a sound purchase.

These searches and inspections can include a personal inspection, having the property surveyed to determine whether there are any encroachments, and reviewing the Council records for outstanding consents or other issues affecting the property.

1 – Engage a pest and building inspector

One of the first steps that purchasers are advised to take is to engage a pest and building inspector to draft a pre-purchase inspection report. This can be a crucial step in determining if the property is subject to any structural defects, unapproved alterations or to see if there is any past or current pest activity. Usually an inspector will only perform and document their findings from a visual inspection, and some inspectors can perform the role of both pest and building inspector.

While architects, engineers or pest sprayers may be building or pest inspectors, many purchasers don’t realise when engaging a pest and building inspector, however, is that you do not have to be licensed, registered with a body, or even have any qualifications to perform the role. In theory, anyone could choose to be a pest or building inspector. Further, there is no requirement that inspectors have any type of insurance to protect against claims.

2 – Watch out for unscrupulous or unqualified practitioners

While many inspectors are no doubt honourable and good at the work that they do, this lack of regulation means that the industry is also susceptible to the actions of unscrupulous or unqualified practitioners. This means practitioners with no real knowledge of the area can provide an assessment that does not have any foundation and provide their services while uninsured.

There is now in New South Wales a legal obligation for real estate agents to inform a purchaser about any property inspection reports that have previously been commissioned, but these should also be treated with caution; some vendors commission reports from inspectors with a reputation for drafting vague or positive reports simply to ensure prospective purchasers aren’t discouraged from making the purchase. Similarly, unless you have a good relationship with your real estate agent, treat any recommendation of or referral to an inspector with due caution.

3 – Check before you purchase

Many purchasers do proceed with a purchase simply on the basis of a report, unaware that that the document doesn’t actually provide any assurances about the state of the property. Only once a problem arises and a purchaser seeks legal advice do they realise some of the more common flaws in a pest and building report:

  • that it is severely limited in scope and so doesn’t cover the problem that has arisen;
  • that the language is impenetrable;
  • that it is non-conclusive or reaches contradictory conclusions; and
  • that the disclaimers are so extensive a purchaser finds they have no legal recourse against the inspector on the basis of the report.

4 – Tips to minimise risk

So, what can you do to ensure that you are protecting yourself when engaging a pest and building inspector?

  • Make enquiries of reputable inspectors, including recommendations from the peak industry bodies;
  • Once you have engaged the inspector, ask questions, preferably in writing, to clarify anything you are unsure about;
  • Ensure you are aware of the inspector’s terms and conditions, including disclaimers, prior to engaging the inspector;
  • Ask your inspector whether they are insured, for details of the insurer and request a copy of their certificate of insurance; and
  • Seek legal advice about the report before proceeding with the purchase.

Final point

A well-researched and written report by a reputable inspector will always be an important step before purchasing a property, but due diligence is also needed to ensure that you are getting what you paid for.

The Department of Fair Trading provides more information on what to look out for in inspecting a property.

IMPORTANT NOTICE – The information contained in this article is not intended to be comprehensive. It is general in nature and is not intended to be used as a substitute for legal or other professional advice. You must seek specific professional advice tailored to your personal circumstances before taking any action based on this article.

Liability limited by a scheme approved under Professional Standards Legislation.

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