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In New Zealand property transactions, building reports are a crucial part of the due diligence process. They help buyers understand the true condition of a property before committing to a purchase - uncovering hidden issues, informing negotiations, and offering peace of mind. However, if misunderstood or misused, they can also complicate a deal. This article breaks down the key aspects of building reports and offers practical guidance for both buyers and sellers.
While it’s common for sellers to provide building reports to prospective buyers, relying solely on these can be risky. Reports commissioned by the seller are not tailored to the buyer’s interests. If defects are missed, the buyer typically has no legal recourse against the seller’s inspector.
To protect their position, buyers should commission their own independent pre-purchase inspection. This ensures the report reflects their specific concerns and can be used to negotiate repairs, price adjustments, or even walk away from the deal if necessary.
Importantly, obtaining your own report establishes a direct contractual nexus between you and the report provider. This means you have legal rights and recourse if the report is negligently prepared or fails to identify significant issues.
In New Zealand, building reports generally follow the NZS 4306:2005 standard, which outlines the minimum requirements for visual inspections. A qualified inspector will usually assess:
These findings can range from minor maintenance issues to serious defects that affect safety or property value.
Red flags to watch for include black plastic piping, weather-side cladding, plaster-style monolithic cladding, and asbestos. These materials may indicate costly repairs or compliance issues.
It’s essential that the report is prepared by a suitably qualified builder or inspector. A poorly prepared report may lack credibility and could weaken any request or claim for remedial work or cancellation of the agreement.
A good building report doesn’t just list problems - it provides context. For example, wear and tear in an older home may be entirely expected and not necessarily a defect, even if certain features don’t meet today’s building code standards. This is because older homes were built under different regulations - such as those in place prior to the 1992 Building Regulations - and were not required to comply with modern standards like NZBC B2 (Durability), which now mandates minimum performance lifespans for materials.
I believe a balanced report will distinguish between genuine concerns and age-related characteristics. For instance, a 1970s home may have original plumbing or cladding that doesn’t meet current best practices, but that doesn’t automatically make it unsafe or non-compliant. In many cases, these features were legally installed at the time and may still function adequately.
This kind of nuanced reporting helps buyers make informed decisions without unnecessary alarm. Instead of reacting to every deviation from modern standards, buyers can assess whether the issue is cosmetic, manageable, or truly problematic - and decide whether to proceed, negotiate, or walk away.
Tip: If you’re unsure about any part of the report, ask questions. Clarify what the issues mean and get estimates for repairs. This will help you decide whether to fix it yourself, request the seller to do so as a condition, or walk away from the purchase.
Under Rule 6.4 of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012, agents must disclose any known issues identified in previous inspection reports, even if those issues have since been resolved.
This rule promotes transparency and protects buyers from unknowingly purchasing a property with a problematic history. However, sellers should be ready to share relevant documentation, and agents must handle disclosures carefully to avoid legal consequences.
Building reports are visual inspections, so they don’t necessarily cover what can’t be seen. Issues hidden behind walls, under floors, or in inaccessible areas (like insulation or internal framing) may go undetected.
If the report raises concerns in these areas, buyers should consider commissioning specialist assessments (e.g., moisture testing, electrical inspections) for a more complete picture.
Additionally, natural hazards known to the local authority, such as flooding, erosion, or land instability, may not be fully covered in a standard building report. Buyers should review Council records and consider expert advice where necessary to understand the full scope of potential risks.
A building report might note signs of renovations, but it won’t confirm whether those changes were properly consented. That’s where a Land Information Memorandum (LIM) comes in.
Buyers should always obtain a LIM from the local council to verify:
This step is essential to ensure the property meets legal requirements and to avoid future complications.
Building reports are a cornerstone of smart property decisions. Buyers should always commission their own independent reports, understand the limitations of visual inspections, and follow up on any red flags. Sellers and agents, in turn, must ensure full disclosure of known issues to maintain transparency and avoid legal pitfalls.
Ultimately, the goal is to approach the transaction with “eyes wide open.” Even if the property isn’t perfect, understanding its true condition helps you assess its real value and make informed decisions. A comprehensive report gives you the full picture, empowering you to buy with confidence or negotiate with clarity.
With this in mind, we recommend that any offer to purchase be made conditional upon satisfaction of a building report and/or a LIM report, or subject to a broad due diligence condition.
If you’re navigating a property transaction and have questions about building reports or your legal obligations, our team is here to help.
In New Zealand property transactions, building reports are a crucial part of the due diligence process. They help buyers understand the true condition of a property before committing to a purchase - uncovering hidden issues, informing negotiations, and offering peace of mind. However, if misunderstood or misused, they can also complicate a deal. This article breaks down the key aspects of building reports and offers practical guidance for both buyers and sellers.
While it’s common for sellers to provide building reports to prospective buyers, relying solely on these can be risky. Reports commissioned by the seller are not tailored to the buyer’s interests. If defects are missed, the buyer typically has no legal recourse against the seller’s inspector.
To protect their position, buyers should commission their own independent pre-purchase inspection. This ensures the report reflects their specific concerns and can be used to negotiate repairs, price adjustments, or even walk away from the deal if necessary.
Importantly, obtaining your own report establishes a direct contractual nexus between you and the report provider. This means you have legal rights and recourse if the report is negligently prepared or fails to identify significant issues.
In New Zealand, building reports generally follow the NZS 4306:2005 standard, which outlines the minimum requirements for visual inspections. A qualified inspector will usually assess:
These findings can range from minor maintenance issues to serious defects that affect safety or property value.
Red flags to watch for include black plastic piping, weather-side cladding, plaster-style monolithic cladding, and asbestos. These materials may indicate costly repairs or compliance issues.
It’s essential that the report is prepared by a suitably qualified builder or inspector. A poorly prepared report may lack credibility and could weaken any request or claim for remedial work or cancellation of the agreement.
A good building report doesn’t just list problems - it provides context. For example, wear and tear in an older home may be entirely expected and not necessarily a defect, even if certain features don’t meet today’s building code standards. This is because older homes were built under different regulations - such as those in place prior to the 1992 Building Regulations - and were not required to comply with modern standards like NZBC B2 (Durability), which now mandates minimum performance lifespans for materials.
I believe a balanced report will distinguish between genuine concerns and age-related characteristics. For instance, a 1970s home may have original plumbing or cladding that doesn’t meet current best practices, but that doesn’t automatically make it unsafe or non-compliant. In many cases, these features were legally installed at the time and may still function adequately.
This kind of nuanced reporting helps buyers make informed decisions without unnecessary alarm. Instead of reacting to every deviation from modern standards, buyers can assess whether the issue is cosmetic, manageable, or truly problematic - and decide whether to proceed, negotiate, or walk away.
Tip: If you’re unsure about any part of the report, ask questions. Clarify what the issues mean and get estimates for repairs. This will help you decide whether to fix it yourself, request the seller to do so as a condition, or walk away from the purchase.
Under Rule 6.4 of the Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012, agents must disclose any known issues identified in previous inspection reports, even if those issues have since been resolved.
This rule promotes transparency and protects buyers from unknowingly purchasing a property with a problematic history. However, sellers should be ready to share relevant documentation, and agents must handle disclosures carefully to avoid legal consequences.
Building reports are visual inspections, so they don’t necessarily cover what can’t be seen. Issues hidden behind walls, under floors, or in inaccessible areas (like insulation or internal framing) may go undetected.
If the report raises concerns in these areas, buyers should consider commissioning specialist assessments (e.g., moisture testing, electrical inspections) for a more complete picture.
Additionally, natural hazards known to the local authority, such as flooding, erosion, or land instability, may not be fully covered in a standard building report. Buyers should review Council records and consider expert advice where necessary to understand the full scope of potential risks.
A building report might note signs of renovations, but it won’t confirm whether those changes were properly consented. That’s where a Land Information Memorandum (LIM) comes in.
Buyers should always obtain a LIM from the local council to verify:
This step is essential to ensure the property meets legal requirements and to avoid future complications.
Building reports are a cornerstone of smart property decisions. Buyers should always commission their own independent reports, understand the limitations of visual inspections, and follow up on any red flags. Sellers and agents, in turn, must ensure full disclosure of known issues to maintain transparency and avoid legal pitfalls.
Ultimately, the goal is to approach the transaction with “eyes wide open.” Even if the property isn’t perfect, understanding its true condition helps you assess its real value and make informed decisions. A comprehensive report gives you the full picture, empowering you to buy with confidence or negotiate with clarity.
With this in mind, we recommend that any offer to purchase be made conditional upon satisfaction of a building report and/or a LIM report, or subject to a broad due diligence condition.
If you’re navigating a property transaction and have questions about building reports or your legal obligations, our team is here to help.
