Common Issues Found in Pre-Settlement Inspections

What if the property looks fine at first glance, but damage, missing fittings, or unfinished work appears after settlement?

A pre-settlement inspection is the buyer’s final chance to check that the property is in the agreed condition before settlement. In Victoria, buyers are entitled to inspect the property at any reasonable time during the week before settlement, and the seller must hand it over in the same condition as when it was sold.

This article explains what to look for in a pre settlement inspection, how to build a clear defect list, what to do if there is damage found after settlement, and when to seek help from a building inspector, conveyancer, or property lawyer.

What Is a Pre-Settlement Inspection?

A pre-settlement inspection is a final walkthrough before settlement. It helps buyers confirm that the property, fixtures, inclusions, appliances, and agreed repairs match the contract of sale.

It is different from a pre-purchase inspection. A pre-purchase inspection is usually done before exchange or before signing a contract, while a pre-settlement inspection happens close to settlement. NSW Government guidance explains that pre-purchase inspection reports can identify major defects, safety hazards, damp, cracking, roof problems, and other issues before buying.

What to Look for in a Pre-Settlement Inspection

A good final inspection before settlement should be practical, organised, and evidence-based.

Consumer Affairs Victoria advises buyers to check that all items included in the contract are present and in the right condition, and to request repairs if damage or non-working items are found during the final inspection.

Pre-Settlement Inspection Defect List

A defect list is a written record of issues found during the inspection. It should include clear notes, dated photos, room names, and the action requested.

Use a simple table so the seller, agent, conveyancer, and inspector can understand the problem quickly.

A building inspection report can also help buyers understand property problems before purchase and may help with price negotiations. NSW Government guidance says a pre-purchase report can help buyers use the information to negotiate a lower price and get specialist advice.

Structural Defects: The Foundation of Your Home

Structural defects are serious because they can affect safety, stability, long-term repair costs, and property value.

Common structural issues found during a pre-settlement inspection include:

• Foundation cracks or movement
• Large wall or ceiling cracks
• Sagging roof areas
• Water damage near structural areas
• Poorly repaired movement cracks
• Balcony or stair movement
• Signs of termite or moisture damage

Foundation Issues

Foundation problems can manifest as cracks in the slab, uneven surfaces, or signs of movement. In new builds, these may indicate poor site preparation, inadequate compaction, or issues with the concrete pour. Foundation defects can worsen over time and lead to significant structural problems if left unaddressed.

Wall and Ceiling Cracks

Cracks in walls and ceilings are one of the most frequently identified issues during pre-settlement inspections. Not all cracks are structural. Hairline cracks in plaster can result from the natural settling of a new building. However, wider cracks, diagonal cracks around door and window frames, or cracks that appear in patterns can indicate structural movement or poor workmanship that requires further investigation.

Roofing Defects

Roofing issues can include incorrectly installed tiles or sheeting, poor flashing around penetrations and junctions, inadequate sealing, and blocked or improperly graded gutters. These defects can lead to water ingress, which can cause significant damage to the internal structure and finishes of a property over time.

Plumbing and Electrical Systems: Hidden Problems That Cost Money

Plumbing and electrical defects are often missed during a quick walkthrough. Buyers should test what can be safely checked during the inspection.

Common plumbing issues include:

• Leaking taps
• Moisture under sinks
• Slow-draining basins or showers
• Poor water pressure
• Running toilets
• Water stains near wet areas
• Hot water faults

Common electrical issues include:

• Lights not working
• Faulty switches
• Loose or damaged power points
• Exhaust fans not working
• Smoke alarms missing or not tested
• Exposed or unsafe wiring

Leaking Fixtures

Leaking taps, showerheads, toilets, and pipe connections are common findings in new properties. These may result from improper installation, faulty fittings, or connections that have not been adequately tightened. While individual leaks may seem minor, they can lead to water damage and mould growth if not rectified.

Water Pressure Issues

Low water pressure can indicate problems with the plumbing system, including undersized pipes, partially closed valves, or blockages. During the inspection, all taps and showers should be tested to ensure adequate and consistent water pressure throughout the property.

Drainage Problems

Blocked or slow-draining sinks, basins, showers, and floor wastes are common issues. In new builds, these can result from construction debris left in the drainage system. External drainage should also be checked to ensure water flows away from the building and does not pool against the foundation.

Non-Functional Power Points and Switches

Power points and switches that do not work are a frequent finding. This can be caused by loose connections, wiring errors, or tripped circuit breakers. All power points, switches, and light points should be tested during the inspection.

Exposed Wiring

Any exposed or improperly enclosed wiring is a safety hazard and a non-compliance issue. This includes wiring that is visible in living spaces, incomplete junction boxes, or cables that have not been properly secured.

Flickering Lights

Flickering or intermittent lighting can indicate loose connections, faulty light fittings, or wiring issues. While it may seem like a minor inconvenience, it can point to a more significant electrical problem that needs to be investigated by a licensed electrician.

Cosmetic and Finishing Issues: Small Defects Can Point to Poor Workmanship

Cosmetic defects may look minor, but they can point to rushed work, poor quality control, or unfinished construction.

Common finishing defects include:

• Uneven paint
• Peeling paint
• Scratched flooring
• Chipped tiles
• Poor grout lines
• Loose handles
• Gaps around cabinetry
• Poor silicone work
• Damaged benchtops
• Misaligned cupboards

Paintwork Defects

Common paintwork issues include uneven coverage, drips, runs, missed areas, paint on surfaces where it should not be (such as window frames or hardware), and colour inconsistencies between rooms or surfaces. These are some of the most frequently reported issues in new builds.

Flooring Problems

Flooring defects can include uneven surfaces, gaps between boards or tiles, chipped tiles, scratched timber, poorly finished edges, and inconsistent grout lines. In carpeted areas, look for wrinkles, uneven stretching, and poorly finished transitions between different flooring types.

Fixtures and Finishing Quality

Poorly fitted skirting boards, architraves, cornices, and door hardware can detract from the presentation of a new property. Look for gaps, uneven joins, misaligned elements, and rough or unfinished edges. While these are cosmetic, they reflect the builder's attention to detail and should be rectified before settlement.

Fixtures and Fittings: Make Sure Everything in the Contract Is There

Fixtures and fittings are common sources of settlement disputes. Buyers should compare the property against the contract of sale, marketing material, inclusions list, and special conditions.

Check:

• Ovens, cooktops, dishwashers, and rangehoods
• Air conditioning units and remotes
• Light fittings
• Curtains, blinds, and shutters
• Door handles and locks
• Garage remotes
• Built-in wardrobes
• Bathroom fittings
• Tapware
• Keys, fobs, and access devices

Missing Appliances or Fixtures

Check that all appliances, fixtures, and fittings listed in the contract or schedule of inclusions are present and correctly installed. Missing items can include dishwashers, ovens, rangehoods, towel rails, toilet roll holders, and shower screens. Everything specified in the contract should be in place at the time of inspection.

Faulty Windows and Doors

Windows and doors should open, close, and lock smoothly. Common issues include windows that do not seal properly, doors that stick or swing open on their own, misaligned sliding doors, faulty locks, and damaged or missing flyscreens. These issues can affect security, weather sealing, and energy efficiency.

Built-In Features

Check built-in features such as wardrobes, shelving, cabinetry, and storage units. Common problems include doors that do not close properly, shelves that are not level, drawers that stick, and hardware that is loose or missing. Verify that these features match the specifications in the contract.

HVAC and Ventilation: Comfort, Moisture, and Mould Risk

Heating, ventilation, and air conditioning should be checked before settlement where safe and practical.

Look for:

• Air conditioning that does not turn on
• Heating that does not work
• Weak airflow
• Noisy systems
• Blocked vents
• Mould near vents
• Poor bathroom exhaust
• Rangehoods not extracting air

Air Conditioning and Heating

Test all heating and cooling systems to ensure they operate correctly. Common issues include units that do not turn on, inconsistent temperatures between zones, unusual noises, and systems that have not been properly commissioned. In ducted systems, check that air flows from all vents and that the thermostat responds correctly.

Blocked Vents

Ventilation openings in wet areas such as bathrooms, laundries, and kitchens should be clear and functional. Blocked or non-functional exhaust fans can lead to moisture buildup and mould growth. Sub-floor vents in homes with raised floors should also be checked to ensure adequate airflow beneath the property.

Ductwork Issues

In properties with ducted heating or cooling, inspect accessible ductwork for disconnections, damage, or poor insulation. Poorly installed ductwork can result in air leaks, reduced efficiency, and uneven temperature distribution throughout the property.

Common Building Areas in Apartments and Strata Properties

Apartment buyers should not only inspect the inside of the unit. Shared areas can affect safety, convenience, strata levies, and future costs.

Check:

• Lifts
• Stairwells
• Basement car parks
• Storage cages
• Security doors
• Intercoms
• Fire doors
• Drainage areas
• Shared balconies
• Common hallways
• Visitor parking
• Signs of leaks or water ponding

Lifts and Stairwells

Check that lifts are operational and that stairwells are properly finished, well-lit, and free of defects. Common issues include incomplete painting, damaged handrails, uneven steps, and missing or faulty emergency lighting.

Basement and Car Parking

Inspect basement areas and car parking spaces for water ingress, poor drainage, cracked or uneven surfaces, and inadequate lighting. Verify that your allocated car space and storage cage (if applicable) are correctly identified and accessible.

Security Systems

Test security features such as intercom systems, swipe card access, CCTV, and security gates. Ensure that all access points are secure and that the systems are functioning as described in the contract or marketing materials.

Damage Found After Settlement: What Can You Do?

This is one of the most searched issues for this topic, so it needs a dedicated section.

If damage is found after settlement, the next step depends on the type of property, the contract, the timing, the state or territory, and whether the issue relates to new building work.

For established properties, it can be harder to resolve issues after settlement unless the contract, warranty, misrepresentation, or another legal right applies. Buyers should speak with their conveyancer or property lawyer as soon as possible.

For new homes or recent building work in Victoria, statutory building warranties may apply for up to 10 years after the occupancy permit or certificate of final inspection.

In Queensland, the Queensland Home Warranty Scheme may provide cover for certain defective residential construction work, with structural defect cover generally lasting 6 years and 6 months for policies since 28 October 2016.

In NSW, statutory warranties commonly run for 6 years for major defects and 2 years for other defects from completion of the work.

Can You Still Negotiate House Price After a Pre-Settlement Inspection?

Yes, buyers may be able to negotiate repairs, a price adjustment, or another agreed outcome if the pre-settlement inspection finds a problem. The result depends on the contract, evidence, timing, and legal advice.

Consumer Affairs Victoria says that if the final inspection finds new damage or an item is not working as it was when the property was sold, buyers can request that the seller make repairs before settlement.

Common options include:

• Requesting repairs before settlement
• Asking for missing inclusions to be supplied
• Requesting a price adjustment
• Asking for money to be held until repairs are completed
• Delaying settlement if legally available
• Seeking advice from a conveyancer or property lawyer

Do not rely on a verbal promise. Put the issue in writing, attach photos, include the defect list, and ask your conveyancer to handle formal communication.

Off-the-Plan and New Build Pre-Settlement Issues

Pre-settlement inspections are especially useful for off-the-plan apartments and new builds because the buyer may not have seen the finished property before.

Common issues include:

• Incomplete finishes
• Missing inclusions
• Poor paintwork
• Damaged flooring
• Defective cabinets
• Poor drainage
• Balcony defects
• Appliance faults
• Cracked tiles
• Poor waterproofing signs

Pre-Settlement Inspection Checklist

Use this checklist during the final walkthrough.

How to Document Settlement Issues Properly

Good evidence makes it easier to raise settlement issues before handover.

Use this process:

1. Take clear photos in good light.
2. Record short videos for moving parts, leaks, or faulty systems.
3. Note the room and exact location.
4. Compare the issue with the contract or inclusion list.
5. Add each issue to the defect list.
6. Send the list to your conveyancer or agent before settlement.
7. Keep copies of all emails and replies.
8. Book a reinspection if repairs are promised.

Legal and Financial Considerations

Negotiate Repairs Before Settlement

If defects are identified during the pre-settlement inspection, you have several options. The most common approach is to negotiate with the builder or seller to have the defects rectified before settlement. Provide a written list of defects with supporting photographs and request a timeline for rectification. Your solicitor can advise on the best approach depending on the severity of the issues.

Request Price Adjustments

For defects that cannot be rectified before settlement, you may be able to negotiate a price reduction or a retention of funds in a trust account until the work is completed. This approach ensures you are not left out of pocket if repairs are needed after you take possession.

Engage Your Solicitor

Your property solicitor plays a critical role in managing defect claims and negotiations. They can advise on your legal rights, draft correspondence to the builder or developer, and ensure that any agreed rectification works are documented and enforceable.

Know Your Rights Under Australian Consumer Law

Australian Consumer Law and state-specific building legislation provide protections for property buyers. For new builds, statutory warranties typically cover structural defects for six to seven years and non-structural defects for two years (timeframes vary by state). Understanding your rights ensures you can hold the builder or developer accountable for defective work.

Getting the Most Value from Your Home and Building Investment

A pre-settlement inspection protects buyers from avoidable stress at the last stage of a property purchase. It helps confirm that the property is in the agreed condition, fixtures are present, repairs are complete, and defects are recorded before settlement.

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