Pre-Settlement Inspection Defects Calculator NZ

Updated  Raise anything found through your solicitor before settlement. Afterwards your position is far weaker.
Quick answer Five issues found at the final inspection with a combined remedy cost of $3,950.00 support a claim of $3,250.00, because a worn chattel is claimed at what it was worth rather than at the price of a new one. That is 0.41% of an $800,000.00 purchase and 4.06% of the deposit already held, which is the context in which a vendor will hear it.

The pre-settlement inspection is the last moment the balance of power sits with the buyer, and most buyers spend it walking through empty rooms feeling vaguely pleased. It is worth an unhurried hour with the agreement in hand, opening things and switching them on, because whatever is missed here becomes your problem the moment settlement occurs. When something is found, the second mistake follows immediately: the claim gets pitched at what it would cost to make everything new. That is not what was agreed. A buyer who purchased a house with a nine year old dishwasher is entitled to a nine year old dishwasher, and asking for a new one converts a reasonable adjustment into a dispute a few days before settlement, which is the worst possible time to be having one.

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What you found

Set anything that does not apply to zero. Use the depreciated basis for a chattel that has simply worn out, and the full cost basis for damage, for something removed that was on the schedule, or for work the vendor agreed to do and did not.

IssueCost to put rightBasisLife remaining, per centClaim
A chattel on the schedule no longer works$700.00
Damage to walls, floors or fittings$1,200.00
An item on the schedule has been removed$600.00
Rubbish or goods left behind$400.00
Agreed work not done, or grounds not as agreed$350.00
Total$3,950.00$3,250.00
For context
What you can reasonably claim
$3,250.00
0.41% of the purchase price
Cost to put everything right
$3,950.00
what you will actually spend
The shortfall you wear
$700.00
depreciation on the worn items

Why the claim is smaller than the cost

Cost to put everything right$3,950.00
Claimed at full cost$2,550.00
Claimed at depreciated value$700.00
Total claim$3,250.00
The difference you absorb$700.00

A worn chattel is claimed at what it was worth, not at replacement cost, because what you agreed to buy was a used appliance. Pitching the claim at $1,400.00 rather than $700.00 asks the vendor for an upgrade.

How the claim looks from the other side

Purchase price$800,000.00
Claim as a share of the price0.41%
Deposit the vendor is holding$80,000.00
Claim as a share of the deposit4.06%

A claim of well under one per cent of the price, raised early and pitched at a defensible figure, is normally settled by agreement without difficulty. One pitched at replacement cost, raised the day before settlement, frequently is not.

What happens next

RouteHow it worksWhen it is used
The vendor remedies itThey fix or replace the item before settlementWhere there is time and the fix is simple
An agreed deductionThe amount comes off the settlement figure by agreement between the solicitorsThe most common outcome, and the one this figure is for
A sum held in trustAn amount is retained in a solicitor's trust account until the issue is resolvedWhere the amount is disputed but settlement should still proceed
Settle and pursue afterwardsSettlement proceeds and the claim is made laterRarely worth it. Your position weakens considerably once you have settled

Refusing to settle is not on this list, because doing so when you are not entitled to puts you in default with default interest running against you. Take advice before going near it.

Raise anything found through your solicitor, immediately, and before settlement. What you are entitled to depends on the sale and purchase agreement, and the general position is that the vendor must deliver the property and the chattels in the condition they were in when the agreement was signed, fair wear and tear excepted. That excludes anything that was already there when you signed. The depreciated basis used here is a reasonable convention for valuing a worn item and not a legal rule, so the figure is a starting point for a negotiation rather than an entitlement. Withholding settlement without a proper basis puts you in default, with default interest and the risk of cancellation. Get legal advice before taking any position beyond raising the issue.

Take the schedule with you

The single most useful preparation for a pre-settlement inspection is printing the chattels schedule and working down it item by item. Switch on the oven, run the dishwasher, test the heat pump in both modes, check that the light fittings are the ones that were there. Almost everything that causes a post-settlement dispute would have been caught by fifteen minutes of that, and once you have settled the cost of the same problem is entirely yours. It is the only inspection in the whole process that costs nothing and is done by the person who cares most.

Pitch the claim where it will be accepted

A claim is a negotiation conducted through two solicitors in the few days before settlement, when both parties have removal trucks booked and strong reasons to reach agreement. That environment rewards a figure that looks defensible and punishes one that looks opportunistic. Claiming the present worth of a worn appliance is obviously reasonable and usually gets agreed. Claiming the price of a new one invites a refusal, and once a vendor has decided you are chancing it, the reasonable parts of your claim get harder too.

Fair wear and tear is a narrow gap, not a loophole

The standard is the condition at the date of the agreement, allowing for fair wear and tear in the weeks since. That is a short period, so the allowance is small. An appliance that worked at signing and does not work now is a legitimate issue, and a carpet that has become marginally more worn is not. Where the line falls in an individual case is a question for your solicitor, but the general shape is clear enough to sort most findings into one pile or the other without argument.

Worked example

A buyer finds five issues at the final inspection. A dishwasher on the schedule has stopped working, replacing it would cost $1,400.00, and it was about halfway through its life, so the claim is $700.00. Damage to walls and floors costs $1,200.00 to repair and is claimed in full. A light fitting on the schedule has been removed, worth $600.00, also claimed in full. Rubbish left behind costs $400.00 to remove and the grounds cost $350.00 to bring back to the agreed state.

Putting everything right costs $3,950.00, but the defensible claim is $3,250.00, with the buyer absorbing $700.00 of depreciation on the dishwasher. Against an $800,000.00 purchase that is 0.41% of the price, and 4.06% of the deposit the vendor is already holding.

How this is calculated

Each issue carries a cost to put right and a basis. On the full cost basis the claim equals that cost, which is the right treatment for damage, for an item removed that should have been left, and for agreed work not done, since in each case you are being restored rather than upgraded. On the depreciated basis the claim is the cost multiplied by the percentage of life remaining, which is the right treatment for a chattel that has simply worn out, since what you agreed to buy was a used item of that age. The total claim is the sum of the individual claims, the total remedy cost is the sum of the costs, and the difference is the depreciation you absorb. The proportions are the total claim divided by the purchase price and by the deposit.

Official sources

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Frequently asked questions

What is a pre-settlement inspection?

It is the purchaser's opportunity, shortly before settlement, to check that the property is in the condition required by the agreement and that everything on the chattels schedule is present and working. It is not a second building inspection and it is not an opportunity to renegotiate the price. It is a check that what you agreed to buy is what you are about to receive.

What can I actually raise at the inspection?

Damage that has occurred since the agreement was signed, chattels on the schedule that are missing or no longer working, and anything the vendor agreed to do that has not been done. What you cannot raise is something that was already there when you signed, however much you now dislike it, or ordinary fair wear and tear over the intervening weeks. The agreement, not your expectations, sets the standard.

Why is a broken chattel not worth the price of a new one?

Because you agreed to buy a used appliance of a particular age, not a new one. If a nine year old dishwasher has failed, what you have lost is a nine year old dishwasher, which was worth a fraction of a new machine. Claiming full replacement cost asks the vendor to hand you an upgrade, and it is the fastest way to turn a reasonable claim into an argument.

Can I refuse to settle until it is fixed?

Refusing to settle is a serious step that puts you in default if you are wrong, with default interest and worse consequences following. The normal path is far less dramatic: your solicitor raises the issue with the vendor's solicitor and the parties agree either that the vendor remedies it, or that an amount is deducted at settlement, or that a sum is held in a solicitor's trust account until it is resolved. Take advice before threatening not to settle.

What if I only notice after settlement?

Your position is much weaker. Once you have settled you have accepted the property, and pursuing the vendor afterwards means a claim rather than a negotiation, with the cost and difficulty that implies. This is why the pre-settlement inspection deserves an unhurried hour with the chattels schedule in hand rather than a walk-through on the way to somewhere else.