Due diligence prevents heartache and bills down the track
Q: When we went to an open home recently the real estate agent offered us a building report so we didn’t have to get our own done. I thought this would save us money but my partner said we shouldn’t trust it. What do you think?
A: If a real estate agent offers you a building inspection report on behalf of the person selling the house, it’s best to treat this as a starting point rather than a definitive guide to a property’s faults.
If you’re serious about making an offer on a property, it’s worth doing things properly.
Ideally, this means engaging a building inspector who can identify significant defects, future or urgent maintenance issues and problems caused by gradual deterioration. They will look for structural problems, any evidence that the property is a leaky building, issues caused by deferred maintenance and areas where there is damp or mould. This is a visual inspection – a building inspector will check in the ceiling and under the floor, but they will not cut holes in walls or carry out any other invasive testing.
The whole property should be checked, including fences, retaining walls and any garages or sheds. They will collate their findings in a detailed and easily understood report. Paying for your own report means you know the credentials of the person who prepared it and that you can be sure of its impartiality.
A good property inspection isn’t cheap, though, particularly if you’re unsuccessful in buying and have to repeat the process. So you have a range of choices, from enlisting a builder mate to using a qualified and insured inspector. You can also make the inspection a condition of your offer on a property. In this case, the report must be prepared by a suitably qualified building inspector. If you then use the findings to get out of the contract, you must provide the seller with a copy of it.
Either way, the more you invest in this exercise the safer you will be if things don’t turn out as you had expected.
The property pre-purchase inspection industry is not regulated in New Zealand, but the Real Estate Agents Authority (REAA) recommends using a qualified building inspector who has professional indemnity insurance, understands the strict legal requirements of their role and carries out their work in accordance with the NZ Property Inspection Standard. This is important because they will help protect you if something goes wrong later on.
If you discover problems with the property that should have been evident in a building inspection, you can make a complaint to the professional body that the inspector belongs to and seek compensation through the courts.
If you buy a property based on a report by someone like a builder mate who is unqualified and/or uninsured, you could end up owning some expensive problems. Even worse, you may severely limit your ability to seek damages if the property has significant issues.
You have limited other avenues if things don’t turn out to be how they were represented to you. You may be able to rely on the warranties included in the sale and purchase agreement by the seller. They are required to confirm that (among other things) any work they have done on the property complied with any necessary permits or consents. You may also have other legal options which you should speak to your lawyer about.
REAA strongly recommends that you speak to a lawyer before you sign the sale and purchase agreement to understand this more.
It’s a good idea to get in touch with a local building inspector as soon as you start your property search. Ask friends and family for their recommendations and request a sample report from any inspector you contact to get an idea of the kind of information they provide.
Depending on what a building inspection finds, you may be able to use a report to help you negotiate with the vendor over price or repairs. Even if a report only finds minor issues, you can still use it as a road map for future maintenance.
The NZ Institute of Building Surveyors and the Building Officials Institute of NZ both hold lists of qualified property inspectors.
Paying for your own report means you know the credentials of the person who prepared it.