A buyer should inspect the property before settlement and compare its condition with the contract and the position at the date of sale. Damage caused by fire, storm, vandalism, a leaking pipe or the removal of included fixtures can raise different issues from ordinary wear and tear. The contract's risk clause, any insurance arrangements and the nature and extent of the damage are central to the analysis.
Some Victorian contract forms contain a mechanism for a limited amount to be held by a stakeholder where the buyer alleges that the property is not in the required condition. The mechanism is intended to allow settlement to proceed while the parties resolve the dispute afterwards. It may require the buyer to deposit matching funds and comply strictly with the contract's notice and timing requirements. It does not apply identically to every contract or every type of dispute.
In *Patmore v Hamilton* [2014] VSC 275, the Court considered the operation of a contractual process for dealing with a condition dispute. The decision should not be treated as a universal rule that every buyer must settle regardless of the contract or the seriousness of the issue. The applicable clause and facts must be examined before deciding whether to settle, seek a holdback, claim compensation or pursue another remedy.
CMK Legal's property and conveyancing team can help with this.
Arrange the final inspection early enough to raise concerns before settlement. Photograph the issue, notify the conveyancer immediately and do not withhold settlement funds or refuse to settle without advice on the contract and consequences of default.
Law referenced: Contract of sale provisions on risk, loss or damage, inspection and stakeholder arrangements; *Patmore v Hamilton* [2014] VSC 275.