What condition should the property be in at settlement?
28 May 2018
One of the most widely misunderstood elements of real estate is what condition a property should be in at settlement or possession.
What does ‘buying as inspected’ really mean?
In short, a property is sold “as inspected”. If there was dust on a ceiling fan when you first inspected before contracting to buy then the fan can be dusty at settlement. The same goes for a dirty oven, a blown light globe or a squeaky laundry door. If it was dirty, blown or squeaky at inspection before purchase then so it should be at settlement.
Buyers will typically expect that the property is handed over to them spick n’ span and thankfully most house-proud sellers leave their homes in an appropriate condition when moving out, however legally there is no obligation for them to do so.
What should you expect at settlement?
If you’re buying a home, it’s smart to have a realistic expectation of what to expect at settlement.
Unless otherwise specified in the contract, the seller is under no obligation to have the property professionally cleaned for settlement and it is surprising how few buyers ask that such a condition be included.
The seller’s only obligation under the contract (Clause 6.1(b) 2 of the General Conditions) is to “…remove from the Property, before possession, all vehicles, rubbish and chattels, other than the Property Chattels.”
Many modern contracts to purchase include provision for essential plumbing, gas and electrical components to be working at settlement. Hence, if at settlement the toilet cistern leaks then the seller ought to make good because the contract says so.
It is trickier when, for example, a telephone jack doesn’t work at settlement. It is not strictly electrical but it is probably reasonable for a buyer to assume that it was functioning at inspection. This is partly because, caveat emptor (buyer beware) has all but disappeared according to some legal practitioners. The onus is probably on the seller to disclose (in this case) that the telephone jack didn’t work.
How to ensure you’re happy with the property at settlement
My view is that buyers need to take reasonable steps to ensure the property they have bought will be presented to them in a condition they are satisfied with.
This can be achieved by either contracting with the seller to guarantee it and/or being more thorough when inspecting the property in the first instance. Ask the agent if it’s ok to turn on taps, flush loos, flick switches, open and close doors, open the oven, turn on the dishwasher and so on before making an offer to purchase.
Buyers ought to have a realistic expectation of what to expect at settlement when buying an established home and acknowledge that opinions of presentation are subjective.
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