Building inspections industry will be affected by new sale and ...

With the latest addition of the Agreement for the Sale and Purchase of Property comes the addition for the first time of a builders report clause in the general conditions:

With this, comes a few changes which I believe will be good for all parties.
Firstly, the report has to be prepared by a suitably qualified building inspector in accordance with accepted principles and methods.
This is rather vague but it does point to someone who has some qualification to provide the report rather than just a tradesman in one area of the building industry or a home handy man.
The other main change which will help the real estate fraternity is that the purchaser must provide a copy of the report to the vendor on request. This is something that has been a real sticking point within the industry as many building inspection companies have included privacy clauses in the fine print of their inspection reports that stop the purchaser from?divulging?the issues raised. ?What this has then mean?t is that the agents involved have to disclose to later purchasers that an offer ?fell over? as a result of a building report but they have no information as to what the issues were and how bad they were, or if any issues actually existed at all. No longer will purchasers or building inspectors be able to hide behind these privacy clauses. This, in my opinion, will encourage greater transparency in the marketing and negotiations process.

Here is a recent article post on the NZ Herald website which also discusses this subject?..

The days of getting a knowledgeable relative to do a ?building inspection? on a house you?re thinking about buying are numbered. The latest version of the Auckland District Law Society and Real Estate Institute of New Zealand sale and purchase agreement, used for most of the country?s real-estate transactions, has become available this month. It requires that any building report is done by someone suitably qualified. In other words, you can?t just ask your handy uncle to come and check out the property.

Barrister and solicitor Peter Nolan, who helped draft the agreement, said the stricter requirement was protection for both parties.

?It needs to be objective. It needs to be fair to the vendor that if the buyer is pulling out on the basis of a building inspection that it was done by an objective person with proper qualifications.?

But the directive has created problems and the Certified Builders Association has warned members not to do building reports because the risk of liability is too high.?Operations manager Jason McClintock said there had been too many cases of things such as leaky buildings where the person who wrote the inspection report was the ?last man standing? after developers went out of business.

Awareness of leaky building problems had made homeowners more litigation-savvy. ?Practitioners are exposed to liabilities they are underinsured for,? said McClintock. ?We?re protecting both parties by saying builders shouldn?t expose themselves, their homes and their businesses to potential liabilities.?

Master Builders Association chief executive Warwick Quinn agreed: ?Under the building regime we are responsible for undertaking construction work. Our liability increases significantly if we undertake consultancy work.? He said that was the domain of registered surveyors. He expected building inspection companies would do the bulk of the inspection work.

Source: NZHERALD ? Susan Edmunds

Source: http://northernsuburbs.co.nz/2012/08/building-inspections-industry-will-be-affected-by-new-sale-and-purchase-agreement/

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