What is a final inspection and why does it matter?

The final inspection is a final walk-through to confirm that the property is in substantially the same condition it was when you exchanged contracts. Under Clause 12.3 of the Law Society Standard Contract of Sale 2026, the vendor must do everything reasonable to enable you to conduct one inspection within the 3 days before completion/settlement. This is not optional — it’s a contractual obligation.

The final inspection matters because settlement represents your acceptance of the property as it stands. Once you settle, you’ve purchased the property with all its defects, damages, and conditions. If you discover serious damage after settlement, you generally have no recourse against the vendor.

The 3-day rule: timing your inspection

Clause 12.3 of the Law Society Standard Contract of Sale 2026 gives you a specific contractual right: the vendor must do everything reasonable to enable you to make one inspection of the property within the 3 days before completion (settlement). This is not just guidance — it’s a contractual obligation that the vendor cannot refuse.

The vendor must make reasonable arrangements to enable this inspection. If they refuse access or place unreasonable restrictions on your right to inspect, they may be in breach of the contract.

Why the 3-day window matters

This strict timing requirement exists for a very practical reason. If you inspect the property two weeks before settlement, you cannot later claim you were unaware of damage that occurred in the week before settlement. The vendor remains responsible for the property until settlement, but your inspection date is the cutoff point. Inspecting within 3 days of completion ensures you see the property in the condition the vendor has maintained right up until handover.

Why not earlier?

Properties can be damaged between your inspection date and settlement. Common scenarios include:

• Fire or water damage
• Storm damage or flooding
• Removalists or contractors damaging fixtures, walls, or flooring whilst removing vendor’s possessions
• Break-ins or vandalism
• Accidental damage during final packing or cleaning

If you inspect early and damage occurs later, you’ve already accepted the property by agreeing it was in good condition. By inspecting within 3 days of settlement, you’re verifying the property’s condition as it was at the time of exchange, at the moment of handover.

Why early inspections put you at risk

Let’s walk through a practical example. You’re purchasing a property for $1.2 million. You arrange your final inspection 10 days before settlement because that’s convenient for your schedule. During the inspection, everything looks good — the property is clean, no damage, and the fixtures are present.

Three days before settlement, the vendor arranges for removalists to take the last of their possessions. During this process, they accidentally damage the kitchen island benchtop, put a hole in the living room wall, and scratch the timber floors. Water damage also occurs from a leaking shower screen they removed.

You don’t inspect again because you already conducted your “final inspection.” If you proceed to settlement, you have agreed to settle on the property ‘as is’ including the damage to the property unbeknownst to you. The vendor is no longer responsible. You now own a property with significant damage you were unaware of.

This scenario is in theory avoidable by following the 3-day rule. Your final inspection protects you by confirming the property’s condition immediately before handover.

What to check during your final inspection

Your final inspection does not necessarily involve a detailed building inspection (although it can if the build is an off-the-plan). You’ve (hopefully) already had a licensed building and pest inspection conducted before exchanging contracts. The final inspection is a final walk-through to confirm that the property is in substantially the same condition it was when you exchanged contracts.

1. Structural condition

Look for any obvious new damage:

• Cracks in walls or ceilings
• Water stains or signs of leaking
• Damaged flooring or torn carpet
• Broken windows or damaged frames
• Signs of mold or dampness

2. Included fixtures and fittings

Confirm that everything agreed to be included in the sale is actually there:

• Built-in appliances (oven, cooktop, dishwasher)
• Light fixtures and ceiling fans
• Curtain rods and blinds (if included)
• Internal doors and hardware
• Air conditioning units (if included)

Your contract of sale will specify which items are included. Some vendors remove items last-minute, so verify everything is present.

3. Cleanliness

The property should be reasonably clean and vacated. You’re not looking for pristine condition (fair wear and tear is acceptable), but you should expect:

• Floors swept and vacuumed
• Bathrooms and kitchen cleaned
• Rubbish removed
• Windows reasonably clean
• No personal items left behind

4. Outdoor areas

Check the garden, patio, and garage:

• Fences in agreed condition
• Gates functioning
• Patio or deck intact
• Garden reasonably maintained
• Pool/spa in working order (if included)

5. Utilities and services

Confirm basic functionality:

• Lights and power working
• Hot water available
• Plumbing fixtures functional
• Gas cooktop working (if applicable)

Take photos and videos during your inspection. If you need to dispute something at settlement, visual evidence is invaluable.

Fair wear and tear: what you can’t claim

You cannot refuse settlement or claim compensation for “fair wear and tear.” This is a crucial distinction many buyers misunderstand.

Fair wear and tear includes the normal deterioration from everyday use:

• Faded or worn paint on walls
• Minor scratches on timber or stone benchtops
• Worn carpet (if carpet is older)
• Loose or rattling fixtures from age
• Slightly yellowed grout or minor staining
• Handles or hinges showing use

You can claim if you find:

• New damage (e.g., fresh wall holes, broken appliances)
• Damage inconsistent with age (e.g., brand-new kitchen suddenly non-functional)
• Undisclosed structural issues (e.g., new water damage)
• Items removed that were agreed to be included

What if you find damage during your final inspection?

If you discover significant damage during your final inspection, you have options:

1. Delay or rescind settlement (if damage is substantial)

If the damage is severe — for example, the entire kitchen has been removed, or there’s active water damage — you may refuse to settle and potentially rescind the contract. Your solicitor can advise whether you have grounds.

2. Negotiate a reduction

You can ask the vendor to repair the damage or provide a discount reflecting the cost of repairs. Normally, funds are withheld from the deposit held by the agent to ensure the Vendor makes the repairs. If the vendor has already begun packing, they may agree to a reduction rather than handle last-minute repairs.

3. Proceed with settlement and claim later

You may settle and pursue a claim against the vendor for the cost of repairs, though this is more complicated and expensive. This requires formal notice to the vendor prior to any settlement to which formal process must be followed.

Discuss any issues that arise immediately with your solicitor. Don’t wait until settlement day. Your solicitor can advise your options and help you negotiate with the vendor if needed.

Frequently asked questions

Jonathan Rzetelski

Solicitor, West Legal & Associates. Admitted to the Supreme Court of NSW and High Court of Australia.