Are you Buying a House?

Would you believe that throughout Perth, almost every inspection clause that real estate agents use on the offer and acceptance is either outdated or insufficient in protecting you as the purchaser?

Prior to 1998, every contract to purchase was subject to a white ant clearance certificate. In 1998, a new Australian Standard for pre-purchase inspections (AS4349.3-1998) was introduced as the new standard, which gave inspectors and purchaser's clear guidelines for how inspections were to be carried out. In 2010, a revised standard was introduced, which changed several of the benchmarks now (AS4349.3-2010). Despite two different Australian Standards being introduced over the past 13 years, today, many real estate agents still make the purchase of a home subject to a white ant clearance certificate. With a white ant clearance certificate you have no standard in which to expect any level of workmanship to have been carried out on your behalf. Without that level of standard, the certificate is not even worth the paper it is written on.

Is making the offer subject to the Australian Standard enough?

Well, this depends on what else is mentioned in the clause. For example (this is a common clause used by several real estate agents in Perth)..."This offer is subject to a timber pest inspection being carried out in accordance with AS4349.3-2010 at the expense of the purchaser no later than 7 days prior to settlement. Should active termites be found in the main dwelling, then the vendor must pay for and arrange the eradication of the termites."

Now on the surface that sounds like a mouthful, it certainly sounds like you as the purchaser is covered and fully protected, and it's no wonder that 99.99999% of purchasers happily sign this clause, however there are many scenarios that you would not be covered for.

What happens if the termites are on the outside of the building, climbing up the external wall and just about to enter the roof? What happens if there are termites in the garage? What happens if there is $80,000 worth of termite damage in the roof? What happens if the roof has borers of seasoned timber? What happens if the roof has European House Borer and requires a $30-40,000 fumigation? What happens if there was a water leak in the roof and several roof timber have fungal decay, requiring treatment or replacement? In any of these scenarios based on the above clause, you would purchase the home 'as is' because the only out you would have is if the seller refused to eradicate any termites found inside the home. No mention of damage, garage, borers, fungal decay etc.

Something else to consider. There are many ways to treat termites, the right way which will focus on eliminating the colony thus giving your future home some level of protection, but there is also the wrong way to treat termites which is to just resolve the immediate issue without any focus on eliminating the colony, where the termites can simply move over to the next timber and start eating. As a purchaser, you do not have any say what-so-ever in whether the termite eradication will be done the 'right way' or the 'cheap way' by the vendor's pest company?

As you can see the pre-purchase inspection clause is perhaps one of the most important aspects of the contract and given the above scenarios, we at SWATAPEST highly recommend that you request your own clause on the contract.

With the assistance of the legal team at One Stop Settlements (www.onestopsettlements.com) who have helped us in preparing this clause to protect you as the purchaser, we suggest you use the following clause:

Now from your perspective as a purchaser, you would be fully covered by this inspection clause. However, from the sellers point of view, if they had more than one offer on the property, it is highly likely that they would go for an offer with the least resistance. Therefore, what many of our clients are now doing is getting us to do the inspection proior to putting the offer on the house. This enables you to know exactly what you are buying prior to making your offer which gives you a double bonus.

1.  You are fully aware of any and all timber pest problems or issues on the property before you make the offer. This allows you to adjust our purchase amount accordingly (when done after the offer is accepted, you can't adjust the purchase price to suit the findings)
2.  You can now make a confident offer with fewer clauses,  (no inspection clause necessary) thus giving you a bit of bargaining power. Imagine if there are competing offers on the table, the one with the least resistance is going to be the one the vendor will accept, but you do not want to be in a position where you are buying a unknown entity.

SWATAPEST offers three different levels of inspections

Basic Inspection Package - Click here for more details

Gold Inspection Package - Click here for more details

Platimum Inspection Package - Click here for more details