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. 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. 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. 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. 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. 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

CriteriaBuilding and Pest ClauseBuilding and Pest Inspection
What it isA contractual condition in the contract of saleA physical assessment of the property by a licensed inspector
Legal effectGives the buyer the right to terminate if unsatisfiedNo contractual power on its own — only informational
When it appliesOnly if included in the contractCan be done anytime — before offer, during due diligence, or pre-auction
CostNo cost (it is a contract term)$400-$700 for a combined building and pest inspection
BenefitContractual protection to withdraw or renegotiateKnowledge 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

AI Contract Review in 60 Seconds

Realestate Lens analyses your property contract and highlights risks, unusual clauses, and hidden costs — giving you the insights you need before making a decision.

Get Started Free