Builder Obligations in Pre-Settlement Inspections

Buying a newly built home or apartment is an exciting milestone, but ensuring the property meets expectations before settlement is crucial. Pre-settlement inspections are the final check to confirm that the builder has fulfilled their contractual and legal obligations.

For homebuyers, this inspection ensures that finishes, fixtures, and structural elements align with the agreed specifications. On the other hand, builders must comply with construction laws, rectify defects, and provide necessary warranties. Without a thorough inspection, unresolved defects could lead to disputes, delays, or costly post-settlement repairs.

Understanding builder obligations during this phase protects both buyers and builders from unnecessary complications and ensures a smooth transition into ownership.

Understanding Pre-Settlement Inspections

A pre-settlement inspection is the buyer’s final opportunity to assess the property before legally taking ownership. This inspection verifies that the builder has completed construction per the contract’s terms, including:

• Structural integrity
• Interior and exterior finishes
• Functional plumbing and electrical systems
• Compliance with local building codes

Process:

1. The buyer and builder schedule the inspection before settlement.
2. The buyer, often accompanied by a building inspector, reviews the property.
3. Any defects or unfinished work are documented.
4. The builder addresses these issues within a reasonable timeframe.
5. If defects remain unresolved, buyers may withhold settlement until corrections are made.

A well-documented pre-settlement inspection ensures both parties understand expectations before finalizing the transaction.

Read further: Understanding Pre-Handover Inspections: A Guide for Homebuyers

Builder’s Legal Obligations Under Australian Legislation

In Australia, several laws dictate builder responsibilities:

• Home Building Act 1989 (NSW) – Establishes builder obligations for residential construction, warranties, and defect rectification.
• National Construction Code (NCC) – Defines safety and performance requirements for new buildings.
• Australian Consumer Law (ACL) – Ensures builders provide services that meet acceptable quality standards.

Builders must deliver homes that align with contract specifications, meet industry standards, and provide statutory warranties that protect the buyer from defects post-settlement.

Failing to meet these requirements can lead to penalties, disputes, or even legal action.

Read further: Legal aspects of pre-handover inspections

Defect Rectification: The Builder’s Responsibility

Defects range from minor (cosmetic imperfections) to major (structural issues). Builders must rectify defects reported in pre-settlement inspections before settlement unless otherwise agreed upon.

Common Defects Found:

• Minor: Scratched benchtops, uneven paintwork, missing fixtures.
• Major: Structural cracks, faulty electrical wiring, water leaks.

Builders should follow a structured defect rectification process:

1. Document defects identified in the inspection.
2. Classify defects (minor vs. major).
3. Provide a rectification plan with timelines.
4. Address the defects within an agreed timeframe.
5. Conduct a follow-up inspection before settlement.

By proactively managing defect rectification, builders ensure smoother settlements and maintain a strong reputation in the industry.

Read further: Key tips for apartment pre-settlement inspections

Timelines for Completing Outstanding Works

Under most contracts, builders must complete outstanding work before settlement, though timelines can vary. Reasonable timeframes depend on the nature of the defect:

• Minor defects: Usually fixed within 7–14 days.
• Major defects: May take weeks or months, depending on complexity.

Factors affecting timelines include:

• Weather conditions – Rain may delay external work.
• Material shortages – Supply chain issues can impact availability.
• Trade availability – Skilled labor shortages may slow down fixes.

Buyers should seek a clear rectification timeline in writing and monitor progress to ensure compliance.

Handling Buyer Complaints About Defects

When defects are identified, buyers should follow a structured complaint resolution process:

1. Document the defect – Photos and descriptions help build a case.
2. Notify the builder – Provide written notice detailing issues.
3. Allow time for rectification – Builders must be given reasonable time to fix defects.
4. Escalate the complaint – If unresolved, mediation through Fair Trading or legal action may be required.

Clear communication between buyers and builders helps avoid unnecessary disputes and ensures compliance with legal obligations.

Builder Warranty Coverage for New Apartments

Australian law requires builders to provide statutory warranties that protect buyers from defects post-settlement:

• 6-year structural warranty – Covers major structural issues affecting safety.
• 2-year non-structural warranty – Covers minor defects like finishes and fixtures.

Builders are legally required to rectify defects covered by warranties at no additional cost to the buyer. Warranty claims should be made in writing with supporting evidence, ensuring a clear record of the defect and request for repair.

Dispute Resolution Between Buyers and Builders

Disputes over defect rectification can often be resolved through negotiation and mediation rather than costly legal proceedings. Standard resolution methods include:

1. Direct negotiation – Buyers and builders discuss and agree on solutions.
2. Mediation – Government bodies like Fair Trading assist in resolving disputes.
3. Tribunal hearings – If mediation fails, matters may be escalated to NCAT or similar bodies.

Both parties can avoid prolonged delays and financial burdens by addressing disputes early.

Advice for Buyers and Builders

Pre-settlement inspections protect buyers and ensure builders meet their legal obligations. For buyers, a detailed inspection ensures defects are identified and addressed before settlement. For builders, proactive defect management and compliance with legal requirements foster trust and reputation in the industry.

• Buyers should conduct thorough inspections and report defects promptly.
• Builders must meet legal requirements, rectify defects, and adhere to timelines.
• Communication and dispute resolution strategies help avoid prolonged issues.

Read further: Tips for a successful off-the-plan property purchase

Are you preparing for a pre-settlement inspection of your new apartment? Whether you’re a buyer or builder, understanding your obligations and rights is crucial to ensuring a smooth and successful settlement process. 

At Owner Inspections, we offer expert guidance on pre-settlement inspections and defect resolution, helping buyers and builders navigate the complexities of the process. Contact us today to schedule a consultation or inspection and ensure your property is fully compliant before settlement.