Subject to finance and building inspection

What is a building inspection? Should a buyer consider a building inspection? A subject to finance clause tells the vendor ( property seller ) that you legally agree to the purchase on the condition that you receive formal home loan approval from your bank. It protects you from losing your deposit or being sued for damages by the vendor should your loan be declined. However, there are slight differences between each state.

This means that the sale of the property will only be a done deal after a standard building inspection has been done. The other ‘subject to’ sale clause is the building inspection. Having already touched on the subject of finance , the other one is agreeing to buy the home provided you can take a building inspector through the property. Your chosen building inspector might be a registered professional inspector or it could be a friend with building knowledge. When negotiating with the seller, you will have the opportunity to make the offer subject to various conditions.

Building Inspection clause. Knowing the difference could save you! When purchasing a property buyers often make the offer subject to a structural building inspection. Making your offer ‘ subject to finance ’ is a standard condition in home purchase contracts. This clause gives you time to organise a loan for the property you’re buying.

It means that if your loan application is refuse you may choose to end the contract and not go through with the sale. These range from minor problems like a leaking tap to serious issues such as termite infestation or structural damage. A correctly-worded building and pest clause may give you the right to withdraw from the contract if the report isn’t satisfactory. You should expect to pay for at least a couple of building and pest inspections (and contract reviews) before you end up buying your house.

The bank finance is more of an issue if you are sailing close to the wind on LVRs (loan to valuation ratio). Or, better still, subject to finance that is satisfactory to the purchaser. Subject to finance by X lender. These might all be unsatisfactory to you. A building and pest inspection report is a valuable tool for property investors, as it can almost always be used to negotiate purchase prices down or alter the contract or settlement terms.

No property is perfect, and even minor defects can give you significant leverage when bargaining. When should I conduct a building and pest inspection ? When a property is available for private sale, you may be able to make an offer “subject to a building and pest inspection”. Older homes may have hidden issues with foundations and roofing, as well as termite infestation. Newer homes can have waterproofing and drainage issues.

Just make sure it is VERY clear on the offer and acceptance that it is subject to a building inspection report satisfactory to the purchaser. I dont think the standard clause lets you get out of the contract otherwise. Or do an inspection before you enter into the contract. Also you want a termite clearance certificate.

You should know the clauses you want to include in an agreement, including the ones related to pest control, building inspection , financial clause, and more. Bear in mind that the more attractive your offer is, the higher are the chances that a vendor will accept it. If you are a buyer and any change is made to the home inspection condition clause, you need to review the changes carefully with your real estate salesperson or lawyer as your rights might be.