- You can only pull out because of a building inspection if your contract has a building condition and you follow its steps and deadlines exactly.
- The common REIWA annexure covers major structural defects, not general wear and tear or cosmetic defects.
- The seller usually gets the chance to repair before you can terminate. If they decline, you may be able to terminate within a set timeframe.
- Minor defects give you leverage, not an exit. Use the report to negotiate a price drop, repairs or a settlement credit.
- SAT is for disputes with builders. A buyer and seller disagreement over the clause is a matter for your settlement agent or lawyer.
“The report only helps you if it lands before your deadline. That’s why we get it to you within 24 hours.”
Russell McCarthy, Registered Builder & Lead Building Inspector
Short answer: in WA you can only pull out of a house purchase because of a building inspection if your offer and acceptance includes a building inspection condition, and you follow its steps and deadlines exactly. The most common REIWA condition only lets you act on major structural defects. The seller then usually gets the chance to fix them before you can terminate. Smaller defects don’t normally give you a way out, but they do give you something to negotiate with. SAT deals with disputes with builders, not disagreements between buyers and sellers.
Russell McCarthy here, registered builder (BP104751) and lead inspector at WA Building Inspections. I’m not a lawyer, and your settlement agent or lawyer is the one to confirm what your contract says. But I write the reports these clauses rely on, week in and week out, so here’s how it plays out on the ground.
| What the report finds | What you can usually do |
|---|---|
| Major structural defect, with a building condition in your contract | Serve notice on time. The seller may repair. If they don’t, you may be able to terminate. |
| Minor defects only | Negotiate a lower price, repairs or a settlement credit. No automatic right to pull out. |
| No building condition in your contract | Negotiate only. You’re generally bound to buy. |
| Deadline missed | The condition may fall away and the contract continues. |
| Defects in a new build you’ve contracted a builder for | Builder dispute. Building and Energy first, then possibly SAT. |
What is a building inspection clause?
A building inspection clause, also called a building condition or annexure, makes your purchase subject to a satisfactory building inspection. Consumer Protection WA recommends buyers make their offer subject to a building inspection and use an inspector with full professional indemnity insurance.
In a REIWA offer and acceptance, the condition sits in an annexure attached to the contract. The one I see most is the Australian Standard Pre-Purchase Inspection for Major Structural Defects. Pest and termite inspections usually have their own separate condition.
Can you pull out after a building inspection in WA?
Sometimes. It depends on three things.
- Your contract has a building inspection condition. No condition, no exit.
- The report finds what the condition covers. Under the major structural defects annexure, that means a major structural defect, not a dripping tap or cracked grout.
- You follow the steps on time: the report by the due date, then a written notice to the seller or their agent within the timeframe the annexure sets.
Once you’ve served the notice, the seller usually has a choice. They can agree to fix the defect, typically using a WA registered builder, and settlement can be pushed back until the work is done. Or they can decline. If they decline or don’t respond, you can generally terminate, but again only inside a set timeframe. Miss a deadline and the condition can fall away, leaving you bound to buy.
The timeframes are short. Sometimes it’s only a few days. That’s why we get the report to you within 24 hours.
“Miss the deadline in your annexure and the best report in Perth won’t get you out of the contract.”
Russell McCarthy
What counts as a major structural defect?
Our reports use the definitions in Australian Standard AS 4349.1. A major defect is a defect bad enough that it has to be fixed to avoid unsafe conditions, loss of use or further deterioration. A structural defect is a fault or change in how a structural part of the building is supposed to perform.
In practice, that’s things like significant cracking in load-bearing walls, a failing roof frame, or termite damage to structural timbers. Cosmetic cracks, worn fittings and general wear and tear usually don’t make the cut.
Can you renegotiate the price after a building inspection?
Yes, and most buyers do exactly that. Even when the defects aren’t serious enough to trigger the condition, a clear report with photos gives you real leverage. You can ask the seller to:
- Drop the price by roughly what the repair would cost.
- Fix the defect before settlement.
- Give you a credit at settlement.
The seller doesn’t have to agree to any of it. It’s a negotiation, not a right. Your agent will usually take it to the seller for you, and any agreed change should go in writing as a variation to the contract.
What about SAT?
The State Administrative Tribunal hears building disputes, mostly between home owners and builders. For example, when a new build has defects the builder won’t fix, a complaint often goes to Building and Energy first and can then end up at SAT. I appear at SAT as an expert witness in exactly those cases.
A disagreement between a buyer and a seller over a building inspection clause is a contract matter. That’s one for your settlement agent or a lawyer, not SAT.
How a clean process plays out
I’ll call the buyer Mel, and I’ve changed the details. Offer accepted on a 1970s double brick home, with the REIWA major structural defects annexure attached. She booked us the same afternoon.
Our report found cracking in a load-bearing wall consistent with footing movement, plus a list of minor items. Her settlement agent served the notice inside the deadline. The seller chose not to repair, Mel terminated within the window, and her deposit came back.
Same inspection, same defect, but two days late on the notice and she’d have been buying that crack.
How to protect yourself before you sign
- Make sure the building inspection condition is in your offer before you sign it.
- Check the due date and diarise it.
- Book the inspection the day your offer is accepted.
- Use a registered builder with professional indemnity insurance.
- Get the report within 24 hours so you have time to act.
- Talk to your settlement agent the moment the report flags anything major.
Frequently asked questions
Can I back out of buying a house after a building inspection in WA?
Only if your offer and acceptance includes a building inspection condition and the report finds what that condition covers, such as a major structural defect. You also have to serve the right notices within the deadlines in the annexure. The seller may be given the chance to repair before you can terminate.
What is the REIWA building inspection annexure?
It’s a standard condition attached to a WA offer and acceptance that makes the purchase subject to a building inspection. The most common version covers major structural defects under Australian Standard AS 4349.1 and sets out deadlines for the report, the buyer’s notice and the seller’s response.
Can I renegotiate the price after a building and pest inspection?
Yes. You can use the report to ask for a lower price, repairs before settlement or a credit at settlement. The seller doesn’t have to agree, and any change should be recorded in writing as a variation to the contract.
Does the seller have to fix defects found in a building inspection?
Not usually. Under the common major structural defects annexure, the seller can choose to repair a major structural defect or decline. If they decline, the buyer may be able to terminate within the set timeframe.
Can I take a building inspection dispute to SAT?
SAT mainly hears building disputes between home owners and builders. A dispute between a buyer and a seller over a building inspection condition is a contract matter for your settlement agent or lawyer.
How quickly should I book a building inspection after my offer is accepted?
Straight away. Building inspection conditions often have short deadlines. WA Building Inspections delivers reports within 24 hours so you have time to act before the due date.
Related Reading
- Can you negotiate after a building and pest inspection?
- What does a building and pest inspection cover?
- SAT expert witness for building disputes in WA
- How much does a building inspection cost in Perth?
Written by Russell McCarthy, Registered Builder (BP104751) and Lead Building Inspector at WA Building Inspections Perth.