If you are buying or selling a property, you may know that Sale and Purchase Agreements now contain the option of a standard building report clause. The purchaser can choose to include this clause by circling “Yes” at the appropriate place on the front page. This new clause affects both vendors and purchasers. However not all building report clauses are created equal, so it will pay you to look closely at the wording.
There are two ways to insert a building report clause into a Sale and Purchase Agreement. One is to accept the standard clause that is already part of the agreement. The second is for you to request the addition of a specific alternative clause.
Standard building report clause contains several points for buyers and sellers
The standard building inspection clause wording has been drafted by the Auckland District Law Society and includes a number of different points including:
- That the report is done at the purchaser’s expense
- The report must be done within 10 working days of the date of the agreement
- The building report must be carried out by a suitably qualified building inspector and a written report provided
- Invasive testing cannot be done without the owner’s consent
As a buyer, you may cancel the sale based on the building report if you are unhappy with any aspect. However, this must be considered to be on reasonable grounds. You may also be asked to provide a copy of the building report to the vendor. This gives the vendor a chance to see the issues.
Read the building report clause closely to prevent problems
Whether you are the seller or the buyer, it is important to read the building report clause carefully. This is especially important if the potential buyer has added a separate clause.
As a purchaser, you should consider issues that put you under undue pressure. For example, the clause might state that the report will be accepted by the buyer if you do not respond within a certain number of days. Or you might have to give the seller a chance to rectify any issues. If you want the building inspection done by someone specific you may also need to alter the clause.
As a vendor, you might want to ensure that you do have a chance to carry out repairs before the buyer can pull out. If the buyer does pull out, it can be a good idea to follow through on the option to have a copy of the report. This could help you solve any problems before you try to sell the house again.
In any situation, it pays to have the building inspection done by a reputable independent company. Whether you are the buyer or the seller, using an independent qualified inspector ensures that the building report is comprehensive and without prejudice.
Consult Your Lawyer
If you have any doubts about the building report clause in your agreement, consult a lawyer before you proceed any further and ask advice. If you want to add a separate building report clause, then you should ask a lawyer to draw up this clause for you.
All the information published on this website, or in any article is true and accurate to the best of the authors’ knowledge. Information on this site should not be a substitute for legal advice. Please consult with your lawyer before signing any agreement.
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- The Standard Building Report Clause
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