For many purchasers, the final inspection feels like the last step before settlement. Finance is in place, moving arrangements are underway, and the keys seem close.
Then a problem appears.
It may be a water stain, a faulty appliance, damage that was not obvious before, or a property that has not been properly cleaned or cleared. Many purchasers assume the vendor must fix the issue before settlement or agree to a price reduction.
Often, the position is not that simple.
The final inspection is important, but it is not a substitute for contract protection
In Victoria, the final inspection allows a purchaser to check the property shortly before settlement. What it does not do is automatically give the purchaser a broad right to demand repairs, compensation or a delay to settlement.
In most cases, the purchaser’s position depends on the contract.
That is where difficulties often arise. If the contract is drafted on vendor-favourable terms, the purchaser may discover at the final inspection that they have very limited contractual leverage.
Why purchasers can be exposed
Many contracts effectively require the purchaser to accept the property in its existing condition, subject only to any rights expressly preserved in the contract.
Some go further and include special conditions under which the purchaser accepts the property with patent and latent defects.
Broadly speaking, a patent defect is one that would be apparent on reasonable inspection, while a latent defect is hidden and not readily observable.
If the contract contains broad “as is” style wording and no clear warranty about condition, working order or presentation at settlement, a purchaser may have little practical ability to insist on a remedy at the final inspection stage.
Settlement pressure changes the equation
Even where a purchaser has a legitimate concern, the timing of the dispute matters.
If the purchaser refuses to settle unless the vendor agrees to repairs or a price adjustment, the purchaser may expose themselves to default if the contract does not clearly support that position. That can have serious consequences, including penalty interest, legal costs and risk to the deposit.
This is why final inspection disputes are often resolved by commercial pressure rather than legal principle alone. A purchaser may have a genuine complaint, but still decide to settle because the risk of not settling is too high.
The real protection comes before signing
The best protection for a purchaser is usually secured before the contract is signed, not at the final inspection.
A careful contract review can identify whether important protections have been removed and whether special conditions should be negotiated to better protect the purchaser’s position at settlement.
Depending on the property and the transaction, those protections may include:
- warranties that appliances, services and included chattels will be in working order at settlement
- obligations requiring the property to be handed over in a neat and clean condition, free of rubbish and unwanted goods
- clauses dealing with specific known defects or agreed repairs
- properly drafted provisions addressing damage or deterioration before settlement
Without those protections, a purchaser may arrive at the final inspection with a complaint, but no clear contractual mechanism to enforce it.
The takeaway
Final inspection issues are common, but many purchasers overestimate what can be achieved in the final days before settlement.
The final inspection remains important. However, it is not the purchaser’s safety net. In most cases, the real protection lies in careful contract review and negotiation before the contract is signed.
Need advice before you sign?
If you are buying property in Victoria, a professional contract review before signing can help identify hidden risks, unfavourable special conditions and gaps in purchaser protection.
Contact us for a professional contract review before you sign. Early advice may place you in a much stronger position if issues arise before settlement.