House of horrors. The man said he would not have made a bid if he knew the extent of the damage. Photo / News.com.au
House of horrors. The man said he would not have made a bid if he knew the extent of the damage. Photo / News.com.au
By Frank Chung
A Sydney homeowner who bought a house only to discover more than A$100,000 (NZ$108,000) worth of damage has warned property-hunters to pay closer attention to their pre-purchase inspection reports.
The buyer, who asked not to be identified, purchased the two-bedroom, one-bathroom 1920s terrace in St Peters in Sydney's inner west last year for nearly A$1 million.
A building and pest report, provided by the selling agent, did not highlight any significant issues, but noted that the building inspector had been unable to access parts of the property. A second report found significant termite damage, structural damage and borer damage.
"The report basically said most things were mostly fine, with the caveat that they hadn't looked underneath the house," he said. "Not being an experienced property buyer, I assumed they didn't need to look under the house because there was no reason."
The original report, which covered the "roof void, internal area, external area and extension", warned that areas not inspected included "the entire subfloor" and "various areas of the roof void".
"A subfloor void appears to be present however, we were unable to located (sic) an entry point and therefore no inspection of the subfloor area was carried out," the report said.
"It is possible that an entry point may exist below floor coverings (if fitted). It is possible that building defects may be present below inaccessible areas however, no comment is made or opinion offered on any area where full access is not available.
"We strongly recommend that access be gained to all inaccessible areas. Access should be gained to enable a further inspection to be carried out prior to purchase."
The second report was obtained by another potential buyer, who opted not to bid based on the damage uncovered. That report inspected the "building interior, building exterior, roof exterior, roof space, subfloor space, outbuildings and the site". "Various areas have significant termite damage," the report said.
"Previous attempts had been made to support the middle bearer under the second bedroom with brackets that have been bolted into the brick foundation walls. Despite this, the bedroom floor is not level.
"(The) timber bearer below the front area of the living/lounge room has been totally eaten by termites. The centre of the lounge room is no longer supported in some areas by this bearer. It needs replacing urgently.
"To help protect against financial loss, it is essential that the building owner immediately control or rectify any evidence of destructive timber pest activity or damage identified in this report."
Under changes introduced in August 2016, real estate agents are required to inform potential buyers if a pre-purchase building and pest inspection report or strata and community scheme report has already been carried out.
Buyers may then opt to access an already available report, usually at a reduced cost, instead of commissioning their own report - giving building inspectors an extra incentive to get in first.
A second report revealed an estimated $100,000 worth of damage. Photo / News.com.au
In an email to one real estate agent, the inspector who carried out the original report on the St Peters home urged the agent to put him on the list early, pointing out that "per the new legislation", a report already carried out by "any other company, and there are some pedantic ones out there" must be listed "to your vendor's detriment".
He added that his inspectors "don't put in any prices on repairs" and were "not pedantic or overly critical of the property", as that was "such a headache for agents with some inspectors".
The St Peters buyer admitted he should have been more careful.
"It's at least partly my fault, I'm happy to admit that, but it's crap that these types of inspection reports are allowed," he said.
He added that he didn't bother seeking legal advice.
"Part of the problem with these reports is every second sentence is a caveat," he said. "They limit liability as much as possible. I saw [legal action] as potentially a bit of a money pit that could go nowhere."
The owner of the company which carried out the original inspection strongly defended his report. "There was no access to the subfloor ... and another inspection was recommended after access has been made available," he said in an email.
"This is the first we have heard of it. If the purchaser actually read the report and followed our recommendations ... before purchase of the property as recommended ... then any termite or borer damage in the subfloor area would have come to light, and any legal advice that he would have had then (sic) made him aware of this fact.
"That's why we have heard nothing about it and will be watching closely if any we take any action (sic) if defamed in any way as we stand fully by our report."
Rhys Rogers, chief executive of sharing economy site Before You Bid, a platform where buyers can share costs and rate inspectors, said consumers should be very careful doing their research. "There are two things which can help consumers work out whether they're getting a report that's worthwhile," he said.
"One is to check on Google to see the inspector's rating. Two is to check if the inspector got under the house and into the roof, because that's where most defects are, that's where the hard work is crawling into these spaces.
"(If they don't), it's a pretty obvious sign that the inspector might just be ticking the box - there should be a good reason. Sometimes they've got quite a few disclaimers in these reports, they can argue that on the day there was no access to the subfloor because there was a piece of furniture in the way."
If the report has gross omissions the buyer can make an insurance claim against the inspector, but Mr Rogers said underinsurance was also a big issue.
"There are estimates that 70 per cent of the industry aren't properly insured," he said.
A spokeswoman for NSW Fair Trading said under Australian Consumer Law, any pre-purchase building and pest inspection reports must comply with "consumer guarantees in relation to the provision of services".
"Services must be provided with acceptable care and skill or technical knowledge and taking all necessary steps to avoid loss and damage, fit for the purpose or give the results agreed to, (and) delivered within a reasonable time," she said.
"Fair Trading strongly recommends that vendors only use consultants that have adequate insurance cover, particularly for professional indemnity."
