The building and pest clause in a Queensland contract, step by step

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Kooky

Builder of Shaka, the payment router that pays every agent their commission on closing date.

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A buyer who walks through a house for twenty minutes on a Saturday cannot see inside the roof or under the floor. The standard Queensland contract deals with that by letting the buyer sign first and look properly afterwards. If the parties agree, the sale is made conditional on a building report and a pest report, and the buyer has until a stated date to obtain them and decide.

The inspection is a tradesperson's job. The condition is a piece of contract drafting, with a deadline, a form of notice, a test the buyer has to meet and a rule about who may see the reports. This guide is about the drafting. It follows clause 4.2 of the Contract for the Sale and Purchase of Residential Real Estate, the document published by the Real Estate Institute of Queensland and the Queensland Law Society and in use in its first edition since 1 August 2025, from the moment a date is written into the schedule to the moment the condition ends. It is general information, not advice on any one contract.

REIQ and Queensland Law Society Contract for the Sale and Purchase of Residential Real Estate, first edition, reference schedule, clause 1 definitions and clause 4.2.

One date that switches it on

Like the finance condition, the building and pest condition is printed in every copy of the contract and applies only if the reference schedule says so. The schedule has a single item for it, the inspection date, and a printed note beside it: if the inspection date is not completed, the contract is not subject to an inspection report.

A buyer who intends the purchase to depend on inspections therefore needs to see a date in that box before signing. The Queensland Government's guidance on contracts of sale lists building and pest inspection results among the conditions a contract may carry, and says the buyer is responsible for making sure the conditions are in the contract.

How long to allow is a matter for negotiation. The period has to be long enough to book two inspectors, get into the property, receive written reports and take advice on them. A period that looks generous on signing day can shrink quickly when the first available inspection is a week away.

What the buyer must obtain, and from whom

Clause 4.2(1) makes the contract conditional on the buyer obtaining a written building report from a building inspector and a written pest report from a pest inspector on the property by the inspection date, on terms satisfactory to the buyer. The clause notes that the two may be a single report.

Two words in that sentence are defined terms. A building inspector, in the contract's definitions, is a person licensed to carry out completed residential building inspections under the Queensland Building and Construction Commission Regulation 2018. A pest inspector is a person licensed to undertake termite inspections on completed buildings under the same regulation. The Queensland Building and Construction Commission says the same thing from the regulator's side: only a licensed residential building inspector can complete pre-purchase building inspections, and only a licensed pest controller can complete termite inspections. It advises buyers to check that an inspector holds the correct licence before hiring them.

The licensing requirement is part of the condition, not a courtesy. A report from a builder friend, a relative in the trades or an unlicensed operator is not the report clause 4.2 describes. A buyer who wants to rely on the condition needs reports that meet its terms, in writing.

The clause also lets the buyer choose. Its last words preserve the right of the buyer to elect to obtain only one of the reports. A buyer of a high-rise apartment, for instance, may decide a termite inspection adds little. The choice is the buyer's, and the condition still operates on the report that is obtained.

Getting through the door

A condition that depends on an inspection needs a right of entry, and the contract supplies one. Under clause 8.2, after reasonable notice to the seller, the buyer and its consultants may enter the property for inspections under clause 4.2. The same clause allows entry once to read any meter, once to value the property, once to inspect smoke alarms and once to inspect the property before settlement.

Reasonable notice is not defined by a number of hours. In practice the appointment is arranged through the seller's agent, who holds the keys and knows the occupants' movements. Where the property is tenanted, the seller's ability to give access depends on the tenancy rules about entry, which is one reason inspection periods on tenanted properties are often set a little longer.

The buyer, for their part, is obliged to get on with it. Clause 4.2(1) says the buyer must take all reasonable steps to obtain the reports. A buyer who books nothing, lets the date arrive and then claims not to be satisfied has not done what the clause asks.

Satisfactory to the buyer, acting reasonably

The condition is that the reports are obtained on terms satisfactory to the buyer. That sounds like a free choice, and it is narrower than it sounds, because of five words in the next subclause.

Clause 4.2(2)(a) allows the buyer to give notice that a satisfactory inspector's report has not been obtained by the inspection date and that the buyer terminates the contract. It then says: the buyer must act reasonably.

The contract does not explain the phrase, and the Queensland Law Handbook, published by Caxton Legal Centre, describes the clause in the same terms: the buyer may terminate if the reports are unsatisfactory, acting reasonably. On its plain words the test ties the buyer's dissatisfaction to the reports. The buyer is being asked whether what the inspectors found, read fairly, is a reason not to go ahead. Significant structural movement, active termites or extensive concealed water damage are the kinds of findings the condition exists for. A list of minor maintenance items in a forty-year-old house, of the sort almost every report contains, sits less comfortably with a claim to be acting reasonably. Where the line falls in a given case depends on the report, the property and the price, and it is the question on which buyers most often need advice before giving notice.

What the test rules out is clearer. The condition is not a second cooling-off period. A buyer who has found a better house, or had second thoughts about the price, cannot use a clean report as the reason to leave.

The notice by 5pm

Whatever the buyer decides, the decision has to be communicated. Clause 4.2(2) requires the buyer to give the seller one of two notices: that a satisfactory report has not been obtained and the buyer terminates, or that the condition has been satisfied or waived.

The deadline is 5pm on the inspection date. The contract's rules about notices in clause 11.3 apply. A notice may be delivered or posted to the other party or its solicitor, or emailed to the address for that party or solicitor in the reference schedule. An email is treated as given when it is sent, and a notice delivered or emailed after 5pm on a business day is treated as given at 9am on the next business day. A notice sent ten minutes late is, for the purposes of the clause, a notice given the next morning.

Waiver is available here as it is under the finance condition. A buyer who has read the reports, found problems and decided to buy anyway can give notice that the condition is satisfied or waived. So can a buyer who never arranged an inspection and is content to proceed without one. In both cases the condition is finished and cannot be revived later if a defect comes to light.

Handing over the reports

One subclause surprises buyers who have paid for the inspections themselves. Under clause 4.2(3), if the buyer terminates the contract and the seller asks the buyer for a copy of the building and pest reports, the buyer must give a copy of each report to the seller without delay.

The provision does two things. It lets the seller see what the buyer says justified the termination, which is the natural check on the requirement to act reasonably. And it tells the seller what is wrong with the property, which the seller will want to know before the next buyer's inspector finds the same thing.

The obligation arises only if the buyer terminates and only if the seller asks. A buyer who proceeds with the purchase is not required by this clause to share the reports.

If the buyer says nothing

The clause finishes with the same pair of provisions as the finance condition. Under clause 4.2(4), the seller may terminate the contract by notice to the buyer if the buyer's notice is not given by 5pm on the inspection date, and that is the seller's only remedy for the buyer's failure to give notice. Under clause 4.2(5), the seller's right is subject to the buyer's continuing right to give written notice of satisfaction, termination or waiver.

The effect is that a silent inspection date ends nothing. The contract continues. The seller acquires a right to bring it to an end, and until the seller uses that right the buyer can still give a notice either way. A seller who assumes that silence means the buyer is happy, and a buyer who assumes silence means the contract has lapsed, are both mistaken.

After a bad report: the conversation the clause does not cover

In many sales the reports are neither clean nor disastrous. They find a leaking shower, a section of roof that needs replacing, old termite damage that has been treated. The buyer still wants the house, at a different price or with the work done.

Clause 4.2 does not provide for that. It offers three notices: terminated, satisfied, waived. It gives the buyer no right to a price reduction and puts the seller under no duty to repair. What happens in practice is a negotiation in the days before the inspection date, with the buyer's right to terminate as the background to it. The seller may agree to reduce the price, to carry out repairs before settlement or to do neither.

Any agreement reached is a change to the contract and has to be recorded as one. A reduced price is a variation of the purchase price. A promise to repair is a new obligation that needs to say what will be done, by whom and how completion will be shown. Until that is in writing between the parties or their solicitors, the buyer's safest course is to treat the inspection date as still running, because a buyer who gives notice that the condition is satisfied on the strength of a verbal promise has given up the right the promise depended on. If the talks need more time than the date allows, the date itself can be moved, with the seller's agreement, in the same way.

What the condition does not reach

The clause is about two kinds of report and nothing wider. It does not ask whether the deck was approved by the council, whether the pool fence complies, whether the street floods or whether the body corporate is solvent. Those questions are answered by other searches and, in some cases, by other parts of the contract.

That limit matters more since Queensland's seller disclosure scheme began on 1 August 2025, because it is easy to assume the disclosure statement fills the gaps. The Queensland Government's guidance on the scheme says the opposite: a seller is not required to disclose the structural soundness of the building, flooding history or previous building or development approvals. The physical condition of the house is still for the buyer to investigate, and clause 4.2 is the standard way of making the purchase depend on the result.

The reports have limits of their own. The Queensland Building and Construction Commission describes a pre-purchase building inspection as not a warranty against future defects, and notes that specialised concerns may need a targeted report from someone such as a plumber or an engineer. A buyer who wants the contract to depend on an engineer's opinion, a pool inspection or a council records search needs a special condition that says so. The standard clause will not stretch to cover it.

If an inspection misses something it should have found, the Commission's guidance is that the buyer must take their own action against the inspector. It says the first step is to lodge a complaint with the Commission, which provides a letter that allows the matter to go to the Queensland Civil and Administrative Tribunal. That is a claim against the inspector. It does not reopen the contract with the seller.

The deposit and the cost of the reports

A buyer who terminates validly under clause 4.2 has not defaulted. Clause 2.3(1) of the contract provides that where the contract is terminated without default by the buyer, the buyer is entitled to the deposit, and any interest earned follows it. The same clause says the buyer then has no further claim unless the termination was due to the seller's default or breach of warranty. The cost of the inspections is the buyer's own, whichever way the decision goes.

A termination that does not meet the clause is a different matter. If the buyer gives notice of termination without acting reasonably, the seller may dispute it and assert that the contract is still on foot. The deposit then stays with the deposit holder until the disagreement is resolved, and a buyer who refuses to complete in reliance on an invalid notice risks being the party in default.

Why sellers sometimes commission their own

Nothing in the contract stops a seller from obtaining building and pest reports before listing. Some do, to learn what a buyer's inspector will find and to fix it or price it in advance. The clause explains why that can be worth the cost. A defect discovered by the buyer after signing arrives with a right to terminate attached and a deadline days away. The same defect known before signing is simply part of what is being sold.

A seller's report does not replace the buyer's. The condition in clause 4.2 is about reports obtained by the buyer, and a buyer is entitled to rely on inspectors of their own choosing.

The clause gives the buyer time to look properly and a way out if the reports justify one. It does not give either side a second negotiation by right.

Read as a sequence, the condition is simple: a date, two licensed inspectors, written reports, a reasonable decision and a notice before 5pm. Most of the difficulty in practice comes from the step the clause leaves out, the bargaining over what to do about a mixed report, and from forgetting that the clock keeps running while that bargaining goes on.

Kooky, from Shaka

Kooky edits Queensland Estate and builds Shaka, the payment router he made for Queensland property professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

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