What is a Building and Pest Clause?
Definition
Building and Pest Clause
A building and pest clause is a contractual condition that makes a property purchase subject to the buyer obtaining a satisfactory building and pest inspection within a specified timeframe. If the inspection reveals significant defects or pest damage, the buyer can negotiate repairs, a price reduction, or withdraw from the contract entirely.
The building and pest clause is a critical protection for property buyers across Australia. It gives you the right to have the property professionally inspected for structural issues, defects, and pest infestations (particularly termites) before you are locked into the purchase. Without this clause, you accept the property in its current condition — including any hidden problems. For practical advice on what inspectors look for and how to act on their findings, see our building and pest inspection guide.
How Does the Building and Pest Clause Work?
When included in the contract of sale, the building and pest clause typically allows 7 to 14 days from the contract date for the buyer to arrange and complete an independent inspection. The exact timeframe is negotiable between buyer and seller.
- 1
Contract signed with clause
The contract includes a building and pest condition specifying the inspection deadline (typically 7-14 days from contract date).
- 2
Buyer arranges inspection
The buyer engages a licensed building inspector and pest inspector (or a combined service) to assess the property. Inspections cost $400-$700 combined for a standard house.
- 3
Inspection report delivered
The inspector provides a detailed written report covering structural condition, defects, moisture, roofing, plumbing, electrical (visual only), and pest activity or damage.
- 4
Buyer decides
Based on the report, the buyer can: (a) proceed with the purchase, (b) negotiate a price reduction or repairs, or (c) terminate the contract if the report is unsatisfactory.
- 5
Notification
The buyer notifies the vendor of their decision before the clause deadline. If terminating, the deposit is returned in full.
What Happens If Issues Are Found?
If the inspection reveals problems, you generally have three options:
- Negotiate a price reduction: Ask the vendor to reduce the purchase price to account for the cost of repairs. This is the most common outcome for moderate defects.
- Request repairs before settlement: Ask the vendor to complete specific repairs prior to settlement, with evidence of completion by a licensed tradesperson.
- Terminate the contract: If the defects are serious (major structural damage, extensive termite damage, asbestos issues), you can exercise the clause and withdraw. Your deposit is returned in full.
Building and Pest Clause vs Building and Pest Inspection
Clause vs Inspection — Key Differences
| Criteria | Building and Pest Clause | Building and Pest Inspection |
|---|---|---|
| What it is | A contractual condition in the contract of sale | A physical assessment of the property by a licensed inspector |
| Legal effect | Gives the buyer the right to terminate if unsatisfied | No contractual power on its own — only informational |
| When it applies | Only if included in the contract | Can be done anytime — before offer, during due diligence, or pre-auction |
| Cost | No cost (it is a contract term) | $400-$700 for a combined building and pest inspection |
| Benefit | Contractual protection to withdraw or renegotiate | Knowledge of the property's physical condition |
Best practice: Always include the clause in your contract and arrange the inspection. The clause gives you the legal right to act on whatever the inspection reveals. An inspection without a clause is useful for knowledge but gives you no contractual leverage.
Risks of Waiving the Building and Pest Clause
In competitive markets, buyers sometimes waive the building and pest clause to strengthen their offer. This carries serious risks:
- Hidden structural defects: Foundation cracks, roof damage, or water ingress can cost tens of thousands of dollars to repair.
- Termite damage: Active termite infestations can cause catastrophic structural damage. Remediation and repair costs can exceed $50,000.
- Asbestos: Properties built before 1990 may contain asbestos materials. Removal is expensive and hazardous.
- No recourse: Without the clause, you have no contractual right to withdraw or renegotiate based on the property's condition.
Frequently Asked Questions
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