Can a buyer pull out after final inspection?

The Short Answer

In most Melbourne purchases, the final inspection is your last check that the place you are buying is in the same condition as when you signed, fair wear and tear aside. It is not a magic button that lets you cancel the deal on the spot.

If you uncover issues, the usual path is to demand repairs or a sensible adjustment, sometimes a short delay. Only in defined situations can you lawfully pull out altogether, for example major damage making the home unfit to live in, a valid cooling off right that is still open, failed contract conditions such as finance or building, or serious disclosure problems with the vendor's statement.

Consumer Affairs Victoria confirms you are entitled to a pre settlement inspection in the week before settlement and that the seller must hand over the property in the same condition as when it was sold. If something is damaged or not working as it was, you can request a repair.

What the Final Inspection Actually Is in Victoria

The final inspection, sometimes called the pre settlement inspection, is usually arranged with the agent within the seven days before settlement. It is there to check that:

The home is in substantially the same condition as at contract
The agreed inclusions and fixtures are present and working
Any agreed repairs have been done
Vacant possession is on track if that is what the contract says

This is a contractual quality check, not a second building inspection and not an automatic right to tear up the contract. It exists because the seller must deliver the property in the same condition as on the day of sale, subject to fair wear and tear, which is the benchmark used at settlement in Victorian contracts.

When You Can Still Pull Out After the Final Inspection

1. Cooling Off Is Still Available

If you bought by private sale, Victoria gives most purchasers three clear business days to change their mind after signing. There are carve outs, including:

Auction purchases and buying within three clear business days before or after a publicly advertised auction
Properties mainly used for industrial or commercial purposes
Properties over 20 hectares mainly used for farming
Repeat contracts for the same property on the same terms
Where the buyer is an estate agent or a company

If cooling off still applies and your three days have not expired, you can cancel by written notice. A small fee applies, the greater of $100 or 0.2 per cent of the price.

2. A Contract Condition Has Not Been Satisfied

Many Melbourne buyers sign subject to finance, or subject to a building and pest inspection. If those conditions have not been met, and you have complied with the steps and timing in the contract, you may be able to end the deal.

This is not about the final inspection itself. It is about whether a condition that protects you has failed in time, and you exercise the right correctly and promptly. Check your dates with your conveyancer, since condition windows can close quietly while you are measuring fridges and choosing blinds.

3. Major Damage Since Contract

There is a special safety valve in Victorian law. If, before you are entitled to possession or rents, the dwelling is so destroyed or damaged that it is unfit for occupation as a dwelling, you may rescind the contract by written notice within fourteen days after you become aware of that destruction or damage.

This is a statutory right, separate from the contract, and it deals with serious events like a fire or flood that renders the home uninhabitable.

4. Serious Disclosure Problems With the Vendor's Statement (Section 32)

The vendor must give you a Section 32 statement before you sign, disclosing key matters about title, notices, services and the like.

If the seller fails to give you a Section 32 before you sign, or supplies false information, or fails to provide all required information, you may have a right to rescind before you accept title and become entitled to possession or rents. The details are technical, so get advice fast, but it is a genuine exit path in the right circumstances.

5. Vendor Default

If the seller cannot provide what the contract promises at settlement, for example clear title or vacant possession when promised, you have rights. Typically the path is to issue a formal default notice that gives the other side time to fix the breach.

If they still cannot complete, you can rescind and pursue remedies. Timing and form matter. The Legal Practitioners' Liability Committee explains how default and rescission notices operate under the Victorian standard contract.

When You Usually Cannot Pull Out After the Final Inspection

Here are common scenarios that worry buyers but do not usually justify walking away:

Minor faults or ordinary deterioration – A loose door handle, a blown globe, a few scuffs to a wall. These are usually classed as fair wear and tear or minor issues that can be fixed without drama.

Missing or faulty inclusions that were working at contract – Think dishwasher, air con, or a broken garage remote. You can insist the vendor repairs or replaces, or agree a money adjustment, but it is rarely a silver bullet for cancellation.

Rubbish, old furniture or an untidy garden – Annoying, yes. Legal basis to walk away, usually no. The aim is to negotiate a clean up or a modest allowance.

Refusing to settle without a clear legal right can put you in default. That can trigger penalty interest under the contract and, if the default continues, the seller may rescind and seek to keep the deposit. The mechanics sit in the standard contract and the law around default and rescission notices in Victoria.

Melbourne Realities at the Final Inspection

Let me paint a familiar picture. You pop back to a townhouse in Brunswick a few days before settlement. The fridge cavity is smaller than you remembered, the washing machine has been removed as expected, but the dryer is gone even though it was ticked as an inclusion. A storm has rattled a fence palings line and one split system is flashing an error.

Do you walk away? Not in a hurry. You:

Photograph everything from a few angles, including appliance model stickers and serial numbers
Make a short list under three headings: missing inclusions, damaged items, outstanding repairs
Send that list and the photos to your conveyancer and the agent the same day, asking for written confirmation of the repairs or an agreed dollar adjustment
If repairs are promised, ask for the tradie booking and an update deadline, plus a follow up inspection on settlement morning
If there is a genuine risk the works will not be finished in time, request a practical solution, such as a short deferral by agreement or a written adjustment figure at settlement

Most of the time, this tidy process resolves things without smoke or sirens.

Risk, Insurance, and Who Carries What Between Contract and Settlement

In Victoria, the standard position is that risk of damage usually passes to the buyer at settlement rather than at contract, which is different to some other states. Lenders still commonly recommend taking out building insurance from the date the seller signs the contract, to safeguard both the bank's interest and yours. It is sensible cover for freak events in the gap between signing and settlement.

If catastrophe strikes and the dwelling becomes unfit for occupation, the statutory rescission right I mentioned earlier comes into play. For less serious events, the seller must still deliver the home in the same condition as at the day of sale, allowing for fair wear and tear. Your final inspection is how you police that promise.

What to Do If You Find Problems at Your Final Inspection

Step One: Capture Evidence

Take dated photos and brief videos. Record model numbers of appliances and thermostat screens. If there are leaks, film the drip or water marks. If keys or remotes are missing, note the exact items.

Step Two: Write a Calm, Clear Email the Same Day

Send your notes to your conveyancer and copy the agent. Use short bullets. Ask for confirmation that repairs will be completed before settlement and request a re inspection. If timing is tight, propose an agreed settlement adjustment instead.

Step Three: Pick the Right Remedy

Common outcomes include:

Repairs before settlement – The cleanest answer. You may line up a second inspection on the morning of settlement.

Settlement adjustment – A dollar amount off the price at settlement, documented in writing. Avoid vague promises.

Short deferral by agreement – If works need a day or two, a brief delay can be kinder than default notices flying around.

Licence to occupy – In rare cases where timing is tight and you need to move, the parties might agree a licence arrangement while paperwork catches up. Get this documented by your conveyancer.

What About Retaining Money at Settlement?

Holding back part of the price for repairs is only possible if the contract already allows it, or both sides agree in writing. There is no general right for a purchaser to unilaterally deduct money at settlement in Victoria.

Where there is real non compliance by the vendor, the formal path is usually a default notice and, if the breach continues, escalation to rescission and damages.

Fair Wear and Tear Versus Damage, in Plain English

Fair wear and tear is ordinary deterioration from day to day living. Think light scuffs to a hallway wall, small dints from a vacuum, a garden that needs a mow.

Damage is something more, such as a smashed pane, a split system that was working at contract but now fails, or a cupboard torn off its hinges. Your photos from the first inspection and at the contract date are your best friend when drawing that line. Consumer Affairs Victoria ties the final inspection back to the obligation to hand over the property in the same condition as when it was sold.

Can You Refuse to Settle If Agreed Repairs Are Not Done?

Sometimes, yes, but tread carefully. If a specific repair was a true term of the contract and it has not been done, that can be a breach. The safest approach is to:

Get your conveyancer to send a firm letter setting out the breach and the required fix
Seek a practical solution such as an agreed adjustment or urgent works with proof of booking
If the breach is serious and the seller is not cooperating, consider a formal default notice

As a purchaser, if you simply refuse to settle without a proper legal basis, you risk default interest and the seller issuing a notice that can lead to rescission and the seller keeping the deposit. The LPLC's guidance on default and rescission notices shows how the process works in Victoria's standard contract.

Real World Melbourne Scenarios and How They Usually End

A Burst Pipe in a Southbank Apartment the Day Before Settlement

If the flat is water logged and unfit to occupy, you may rescind under the statutory rule if you act within the time limits. If it is a smaller leak, expect a scramble to repair, dehumidify, and possibly adjust the price. Insurance and body corporate involvement can be key.

Tenants Still in a Thornbury House on Settlement Day

If your contract promised vacant possession, the vendor must deliver it. Your conveyancer will likely issue a default notice and refuse to settle until vacant possession is available, or negotiate a short extension on terms.

A Dishwasher Dead at Final Inspection in St Kilda

If it worked at contract and is listed as an inclusion, the seller should repair or replace, or agree a fair allowance. Your photos and the agent's listing help. Consumer Affairs Victoria supports that you can require repairs where items are not working as at sale.

Solar Panels or a Split System Missing in Coburg

If they were inclusions and have been removed, that is a clear problem. Push for immediate reinstatement or an adjustment that covers supply and installation by a reputable contractor. Document it.

Your Week Before Settlement Game Plan

Day by day, here is how to stay in control.

Seven to five days out – Book the final inspection. Pull out your contract and the list of inclusions. Gather your earlier photos.

Three days out – Inspect with a friend who notices the things you miss. Run taps, check hot water, test all burners, cycle the dishwasher, switch on the heating and cooling, open every window, check keys and remotes, and walk the boundary fence.

Same day – Send your notes and photos to your conveyancer and the agent. Ask for fixes with a deadline or an adjustment in writing. Line up a second look on settlement morning if needed.

One to two days out – Confirm the repairs are booked or the adjustment is agreed in writing. If there is a genuine risk of non completion, discuss a short extension on terms rather than forcing a default at 4 pm on a Friday.

Settlement morning – Re check if repairs were promised. If all is in order, settle and collect the keys. If not, follow your conveyancer's advice on the best next step.

Frequently Asked Questions

Is the final inspection compulsory?

Not strictly, though you would be brave to skip it. Consumer Affairs Victoria says you are entitled to inspect during the week before settlement and the seller must hand over the property in the same condition as when sold. The inspection enforces that promise.

Can I keep money back at settlement if something is broken?

Not unless the contract allows it or the other side agrees. Otherwise, the formal way to deal with non compliance is through notices and negotiated outcomes.

Do I still need insurance if the seller carries risk until settlement?

Yes. Lenders often require building insurance from the date the seller signs, and it is good common sense.

What is fair wear and tear?

Everyday deterioration that comes with normal use, not damage. Your photos at contract and at the final inspection help you draw the line. If an item that worked at contract no longer works, you can insist on repair or a sensible allowance.

When to Get Advice, Fast

If you discover anything serious at your final inspection, call your conveyancer immediately. Timeframes can be tight, and the correct letter at the right hour often saves a full day of stress.

If the issue points to a statutory right to rescind, such as uninhabitable damage, you must act within the window set by law. If the seller is not cooperating or settlement is at risk, your conveyancer can prepare a default notice or line up a short extension on fair terms.

Bottom Line for Melbourne Buyers

The final inspection is your moment to make sure the home you fell for is the home you receive. It is not a free pass to walk away, but it is powerful if you use it well. Know your lawful options, record what you see, and lean on your conveyancer to turn problems into either repairs, a clean adjustment, or, in rare cases, a safe exit.

Need Help or a Second Opinion?

If your final inspection has raised a curly issue, or you want a steady hand to guide you through settlement week, Pearson Chambers Conveyancing is ready to help. We can review your contract, chase repairs, negotiate practical adjustments, and, where necessary, take the formal steps to protect your position.

Contact Pearson Chambers Conveyancing
Email: contact@pearsonchambers.com.au