What to Do When Your Building Inspection Report Finds Major Defects

AS 4349.1 distinguishes major defects from minor defects. A major defect is one that significantly affects the structural performance, safety, or amenity of the building. The report should clearly identify which defects fall into which category, with photographs and locations.

If you receive a major defect finding before exchanging contracts, you have the most options. You can withdraw, renegotiate the price, request rectification before settlement, or commission specialist reports (structural engineer, hydraulic consultant, electrical contractor) to scope the fix.

If you are within a cooling-off period after exchange, you can usually still withdraw with limited financial penalty. Cooling-off periods vary by state, five business days in NSW, three business days in Victoria, three to five business days in Queensland depending on contract type. South Australia has two clear business days. Auction purchases typically have no cooling-off period.

If you are past the cooling-off period or the property was bought at auction, your options narrow. You may still be able to negotiate with the vendor, but they have no legal obligation to assist.

A common misconception is that building reports give you a right to walk away. They do not, your contract terms do. Always read the building inspection clause in your contract before commissioning the inspection.