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Hi everybody - George Sourris, Empire Legal.

Today's topic: Advanced Lessons for Building & Pest and Finance in Queensland.

 I am going to break this down into two topics. Yes, you guessed it:

1. Building and Pest.
2. Finance.

I suggest if you aren't familiar with the basics of these clauses, you check out our blogs we've already done on both of these topics. Here are the links:

Building & Pest 101 Blog

Finance 101 Blog

All right, let's jump right in.  

Building and Pest.

In Queensland, if a buyer terminates their contract under building and pest, they must  (MUST) - provide a copy of the building and pest report if requested by the seller, without delay.

We recently saw an instance where a buyer engaged a builder who was a friend, to perform a building and pest inspection on a property in Brisbane. There were issues with the builder's report - so the buyer wanted to terminate. When the inspection report was produced, it was revealed that the report was not conducted by a person who was licensed to undertake inspections and he didn't fall under the contract's definition of a "licensed building inspector". Consequently, the buyer could not validly terminate the contract and instead elected to proceed with the purchase, despite the buyer's unlicensed inspector finding issues with this property. 

If a buyer cannot produce a report by a licensed inspector, then they run the risk of being sued or suffering losses if they attempt to unlawfully terminate. If the buyer in this example paid for a building and pest inspection from a licensed inspector, which you can get for roughly $500 give or take, they could have walked away from the property that potentially has major problems, and cost significantly more than $500 to fix.

Two quick fun facts for REIQ contracts.

Number 1 - the definition of a "building inspector" means a person licensed to carry out completed residential building inspections under the Queensland Building and Construction Commission (QBCC), Regulation of 2003.

Number 2 - the definition of a "pest inspector" means a person licensed to undertake termite inspections on completed buildings under the QBCC Regulations of 2003. So, buyers, make sure you confirm with your building and pest inspector that they are licensed under QBCC to carry out the job. If they're not, sack them and find someone who is. 

I've placed below a screenshot of the Standard Terms of Building & Pest for anyone that wants to have a deeper read. 

Section two - Finance. 

Recently, I was told by the other side solicitor (we were acting for the buyer), that when our client terminated under the finance clause for a property purchase, that we had to show proof of an official decline letter from the client's financier -otherwise, it's "illegal".  We politely ask the seller's solicitor to direct us to the terms of the contract that oblige our client to provide a declined letter from a bank. The punchline is that there is no contract term that obliges this, at all.

In fact, you'll see there's no contractual obligation on a standard REIQ contract to provide any sort of letter from a bank or financial institution that a client cannot get a loan. 

Keep in mind here that other bespoke contracts may be drafted differently, or there may be Special Conditions that oblige some sort of evidence from a lender for failed finance. However, for a standard contract, a decline letter is simply not required. A buyer may be approved for a loan, but decide that the terms of the loan are not satisfactory to them. 

This buyer can terminate the contract, however, they would need to ensure they've taken all reasonable steps to obtain satisfactory approval. So, what does that even mean? It means that if you're a buyer and you terminate under finance, you better make sure you took all reasonable steps to obtain satisfactory approval - including making an application to the lender and doing all things necessary to progress that application. 

Okay, so whilst a buyer may technically not be obliged to send a "decline letter", if the seller calls your bluff on the termination under speculation that you're not actually taking reasonable steps to obtain a satisfactory loan and you end up in court, you may lend yourself in some very expensive and stressful hot water. 

Well, I hope this added some genuine value to you, if you took the time to tune in and listen today. Share this with a colleague or a friend.

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Thanks, everyone. George Sourris Empire Legal. 

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George Sourris. Empire Legal.

If you have any questions, you can email me: george@empirelegal.com.au. 

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Thanks for reading everybody. See you on the next one.

Ladies and gentlemen, please keep in mind that all advice is general in nature and does not constitute legal advice. This is authorised by George Sourris, Empire Legal, Brisbane, Queensland, Australia.

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Note: all information is general in nature and as each matter is unique please contact our office for tailored advices: the above does not constitute legal advice.