In Queensland, it is not compulsory to have a building and pest inspection performed when property changes hands. There is no legislation that requires it, no fine involved and not even a small prison term!
However, a mortgagee will usually ask for a written report that details the condition of the property, both in terms of the building construction and the presence (or not) of pests and any damage they may have caused. They can do this because:
- They have leverage – The purchaser needs the loan approved to buy the property.
- They are taking on a risk – This risk is much greater if the collateral i.e. the property being purchased, has unseen damage. It could result in the property being worth much less than the value of the loan. This would put the mortgagee in a loss-making situation.
- They are calling the shots – If a satisfactory inspection report is a condition of the contract, the results can determine if the contract proceeds to settlement.