The pre-settlement inspection: what to check, and what to do if something is wrong

Meet Mel, again

When we last sat with Mel, her Saturday circuit of four opens had produced one shortlist entry: a three-bedroom place in Melbourne's outer north, in the kids' school zone, taps hot and windows locking, and an agent who mentioned the vendor wanted a long settlement. She offered, in writing, with conditions on finance and a building inspection. The vendor accepted at $480,000, with a 2 per cent deposit of $9,600 under the single-parent stream of the 5% Deposit Scheme, and the long settlement the vendor wanted: 90 days, which happened to land in the school holidays. Finance came through. The building and pest inspector found an elderly hot water service and a pergola that sagged, neither of them major, both of them noted.

Eighty-three days later the agent rang to arrange "the final inspection", and Mel realised she did not know what one was for.

Mel isn't a real person, but her situation is. Every rule in this story is real and linked to its source below.

What it is for, and what it is not

The building and pest inspection, back in week one, asked what is wrong with this house? The pre-settlement inspection asks something much narrower: is this the house we bought? Two checks, really. Has anything changed since the day of sale? And is everything listed in the contract still here and still working?

Consumer Affairs Victoria puts the entitlement plainly: you may inspect at any reasonable time during the week before settlement, the contract requires the seller to hand over the property in the same condition as when it was sold, and if something is damaged or not working as it was on the day the property was sold, you can request a repair (Consumer Affairs Victoria). That is the whole legal frame. Everything below is how to use it well.

Book it properly

Three things Mel's conveyancer told her before she rang the agent back:

• Go after the vendor has moved out, if the dates allow. A furnished house hides floors and walls; an empty one shows you exactly what you are receiving, including whatever has been left behind.
• Go in daylight, for the same reason she went to opens in daylight. Cracks, stains and a missing light fitting are easier to miss at 6pm in July.
• Go as late in the week as you can while leaving time to fix things. Settlement was Tuesday; she went Thursday. A problem found on Thursday can be repaired by Monday. A problem found the morning of settlement cannot.

The agent arranges it, and will usually come along. That is fine. The agent is still the vendor's agent, so "don't worry about that" is their opinion, not a ruling.

What she brought

• The contract of sale, for its list of what came with the house. On Mel's: the oven, the dishwasher, the heating unit, the blinds, the garden shed, the clothesline. Anything not on that list belongs to the vendor, and the offer story is blunt about why that list matters.
• The building and pest report and her photos from the open home, because "same condition as the day of sale" needs a record of the day of sale. Memory is a poor witness eleven weeks later.
• Her phone, and a charger. Photos of anything that has changed, with the timestamp on. The charger is the fastest way to test every power point in the house.

Mel's list, room by room

The open-home checklist from her last story still works. The question just flips, from is anything wrong? to is anything different?

• Everything on the contract's list, switched on. The oven heats, the dishwasher runs a cycle, the heating fires up, the blinds go up and down. Not "it's there". It works, the way it did.
• Hot water, taps and toilets. Hot water arrives, pressure the same as at the open, every toilet flushes and refills.
• Windows, doors, locks and keys. Every window opens and locks. Every external door has a key, and she counts them, plus remotes for the garage door and any alarm code, written down.
• Walls, ceilings and floors against her photos. New stains, new cracks, new holes where something was removed. Marks where furniture stood are wear. A hole where a wall-mounted TV was ripped out is damage.
• Power points and light fittings. Charger into every point. Fittings are fixtures and should stay; the vendor's floor lamps are not and will not.
• Outside. The shed is there and the door closes. The clothesline is there. The pergola is the pergola she inspected. The garden has not been stripped.
• Rubbish and leftovers. Vacant possession means empty, not "we left you some things in the shed".
• Meter readings, photographed, for the utility connections she was setting up for Wednesday.

Fifteen minutes with a list, the way her first story taught her, except this time the list came from her own contract and her own report.

What "same condition" actually means

Two phrases do the work here. Fair wear and tear is the ordinary ageing of a lived-in house between the day of sale and settlement: a scuff on a skirting board, a faint mark where a picture hung. The seller does not have to repaint for you. Damage is anything beyond that: a cracked window, a hole in a wall, a stripped fixture, a pergola that was standing on the day of sale and is not now. Under the standard Victorian contract the seller carries the risk of loss or damage to the property until settlement, so damage between sale and settlement is the seller's problem to put right, not yours to absorb (Pearson Chambers, on property damaged before settlement).

Goods on the contract's list have their own version of the rule: they must be there, and in the condition they were in on the day of sale. A dishwasher that has gone with the vendor is a breach. A dishwasher that is there but has died in the intervening ten weeks is also a breach, if it worked on the day of sale.

If something is wrong: four moves, in order

Here is the part Mel needed, because something was.

1. Document it, that minute. Photos with timestamps. A short video if it is something that does not work. The agent standing next to you is not a substitute for a record.

2. Tell your conveyancer the same day. Not the agent, who works for the vendor. Your conveyancer is the person who can do something with it, and the clock to settlement is short.

3. Ask for the repair or replacement before settlement. This is the standard first step and the one Consumer Affairs Victoria names: you can request a repair. Your conveyancer puts it to the vendor's side in writing. Most vendors fix things; they want to settle too.

4. If the vendor will not or cannot, settle the difference in money. A negotiated reduction in the price, or a sum held back by the conveyancers at settlement until the repair is done or the cost is agreed. Here is the hard truth that sits under this step: under the standard contract a buyer generally cannot delay settlement because an item is not in the required condition. You settle on the day and claim compensation for the breach (Victorian Property Settlements, on damage before settlement). A buyer who refuses to settle over a dead dishwasher is the party in default, which is a far worse place to be than a buyer owed the price of a dishwasher. Money fixes almost everything on this list. Delay fixes nothing and costs you.

The one case where you can walk away

There is a serious exception, and it is written into the law rather than the contract. Under section 34 of the Sale of Land Act 1962 (Vic), if a home is destroyed or damaged so as to be unfit for occupation before you become entitled to possession, you may rescind the contract by written notice within 14 days of becoming aware of it, and any money you have paid must be refunded. The contract cannot take that right away; any clause that tries is void (Sale of Land Act 1962, s 34). You may see "28 days" quoted on some websites. The Act says 14. Count from the day you found out, and get the notice to your conveyancer the same day.

This is for the fire and the fallen tree, not the cracked tile. But it is also the reason your lender wanted building insurance from the day the vendor signed, as the settlement story explains: the law gives you an exit, insurance gives you cover, and you want both.

How it played out

Thursday, 3pm, an empty house, the agent on his phone in the driveway. Mel's list found two things.

The dishwasher was gone. Listed in the contract, present at the open, not present now. The vendor's agent said the vendor "didn't realise it was included". Mel photographed the gap under the bench and the plumbing left behind, and rang her conveyancer from the kitchen.

The pergola had come down at one corner. Not the sag the inspector had noted; a post had gone over in a storm the fortnight before, and a third of the roof was resting on the lawn. Wear and tear is a faded beam. This was damage, after the day of sale, on the vendor's side of the risk.

Her conveyancer wrote to the vendor's side that afternoon: replace the dishwasher and make the pergola safe before Tuesday, or agree an amount. The vendor could not get a pergola repaired in two business days and did not want to delay settlement any more than Mel did. By Monday they had agreed a reduction at settlement covering a like-for-like dishwasher and a quote for the pergola post and roof, and the vendor's son had cleared the shed. Settlement went through on Tuesday at 11am. Mel had the keys by lunchtime and the kids back at the same school, from the new house, the following Monday.

The question that steadied her wasn't "what if they refuse?" It was quieter and more useful: what is this worth, and who do I tell, today? Asked that way, two problems that could have felt like a disaster were a photograph, a phone call and a number.

If you're like Mel

This is exactly what Havenli builds for the final week: a pre-settlement checklist generated from your contract's list of inclusions and your building report, so you walk in knowing what to compare against, and plain-English answers at 9pm to the questions that come up in the driveway: what counts as fair wear and tear, whether you can refuse to settle (usually not), and what to do first. See how Havenli works, read what happens between offer and keys, or go back to Mel's open-home checklist.

This story is general information, not financial, legal or real estate advice. Mel isn't a real person, her numbers are illustrative, and your circumstances will differ. The standard contract's conditions and the law change, and the terms of your own contract are what bind you; always confirm the current details with the official sources linked above, and have a licensed conveyancer or solicitor act for you at settlement.