Pre Settlement inspections are essential for Investors
Pre-settlement inspections are an essential part of the purchasing and settlement process when buying a property. It is clearly written in the Joint Form of General Conditions that the seller shall give the purchaser reasonable opportunity to inspect the property within seven days prior to settlement. The timing of the inspection many vary depending on your sales contract and what is agreed upon between the buyer and the seller.
The pre-settlement inspection is intended to provide the purchaser with the opportunity to confirm all the contractual requirements and specifications have been met and all fixtures and fittings are in good working order.
Those who have built or purchased a property to live in usually pay a lot of attention at these inspections and are meticulous about examining their new home. They want everything to be perfect before they move in but unfortunately investors often don’t pay enough attention to the importance of these inspections, which can lead to problems further down the track.
Assuming an investor wants to have the property tenanted as soon as possible to start receiving rental income, it makes sense to have all issues rectified prior to settlement and there are a number of things to keep in mind when it’s time for the pre-settlement inspection. It’s important to be prepared for the inspection with a clear idea of the items to look out for.
Externally, check windows and seals are all intact, the roof is solid with no major gaps or holes, and that the garage door works (if applicable).
It’s also a good idea to check the structure of the home for small issues that may grow to larger problems as the home settles into its foundations. These are items such as cracks in brickwork or light settlement cracks in the paint. The builder may not be obliged to fix items prior to settlement (as they are not structural defects as yet) but they are worth keeping your eye on for future reference. You should also ensure the quality of workmanship such as painting, tiling and grouting is of a high standard.
Inside, move from room to room checking that all windows and doors open and close (and the locks work), built in robes have the required hardware, and the floor coverings are as specified. Check to make sure each light switch works and the switches are wired to the appropriate fitting.
It is not uncommon for some purchasers to turn up to their pre-settlement inspection with a hairdryer (or other similar appliance) to plug into each power outlet to ensure they are in good working order. You may not feel the need to go to this level of detail but you are entitled to be as thorough as you wish!
When it comes to the wet areas, make sure all the appliances work including heating and air conditioning, cupboards open and close, and the fixtures and fittings are as per your contract. It’s also a good idea to run some water into the sinks and check for any leaks in the cabinetry below.
Check all your appliances are working (such as the hotplates and oven) and remember to always ask where the emergency cut-off valves are located for the gas and water supply, and convey the location to the tenant. Should an accident occur, this information could save your property from major damage.
The pre-settlement inspection is also a great time to ask any questions about the property such as who to contact if there are any problems, and what sort of time frame it takes to have an issue rectified. You may also like to enquire about the manual and warranties for all the appliances in the home.
If you are moving into an apartment or strata complex, the pre-settlement inspection is the time to ask about any common areas and to make sure the amenities relevant to you, such as lifts and common areas, are all completed and in good working order. If not, make sure you have a clear understanding of when they are due for completion.
As an investor, you may not be planning to live in the home but your tenants are, and they will be as particular as a purchaser so you must ensure the completed standard of the home will meet the highest expectations. All it requires is good attention to detail so use the pre-settlement inspection to your advantage to ensure your investment property is the best it can possibly be.
DISCLAIMER:This information is of a general nature only and does not constitute professional advice. We strongly recommend that you seek your own professional advice in relation to your particular circumstances.