Defects Found After Settlement: What Are Your Options

Discovering a defect after you have already settled on a property, whether it is a leaking roof, faulty wiring, or a structural crack that was not obvious during inspections, is one of the more disheartening experiences a buyer can have. Once settlement has occurred, your options depend heavily on what type of defect it is, whether the property was newly built or established, and what was disclosed, or not disclosed, before you signed the contract. There are genuine avenues for recourse in many cases, but they generally involve acting promptly and understanding which one applies to your situation.

New Builds and Statutory Warranties

If the property was built or substantially renovated recently, statutory warranty protections under state home building legislation may apply regardless of what your contract of sale said. In New South Wales, for example, the Home Building Act sets warranty periods for residential building work, with major structural defects covered for a longer period than other, less serious defects. As the NSW Building Commission explains, these statutory warranties cannot be excluded or limited by contract, and homeowners can lodge a complaint through Service NSW if a builder will not address a covered defect. Similar statutory warranty schemes exist in other states, though the specific timeframes and complaint processes differ, so it is worth checking your own state's building regulator early rather than assuming the same rules apply everywhere.

Established Homes and the Principle of Buyer Beware

Established properties are generally sold on an as-is basis, which means the seller is not obliged to fix defects that existed before settlement unless they actively concealed them or made a false representation about the property's condition. This is why a thorough building and pest inspection before you exchange matters so much, since defects that a competent inspection should have identified are usually considered the buyer's responsibility once settlement has occurred. A defect that was genuinely hidden, such as damage concealed behind fresh paint or new flooring, sits in a different category and may support a claim depending on what the seller knew and disclosed.

Misrepresentation and Non-Disclosure

If a seller made a false statement about the property, whether directly or through a vendor's disclosure statement, and that statement induced you to buy, you may have grounds to pursue a claim for misrepresentation or, in some states, non-disclosure. This is a legally complex area, since you generally need to show the seller knew or ought to have known about the defect and failed to disclose it, or actively misrepresented the property's condition. This is general information rather than legal advice, and a solicitor experienced in property disputes can help assess whether the facts of your specific situation support this kind of claim.

Vendor disclosure obligations differ significantly by state, which affects how strong a non-disclosure claim might be. In Victoria, for example, a seller must provide a vendor statement before you sign, and a material defect misstated in that document can support a claim in a way that would not apply in a state without an equivalent disclosure requirement. Checking what your state requires a seller to disclose upfront, ideally with your conveyancer at the time of the original Victorian or interstate purchase, gives you a clearer sense of whether a defect discovered later was something the seller was actually obliged to reveal.

Defects Involving Shared Buildings

In a strata or community title property, some defects relate to common property rather than your individual lot, such as a shared roof, external cladding, or building services. These are usually the responsibility of the owners corporation or body corporate to manage and fund, often through existing reserves or a special levy, rather than something an individual owner pursues alone. If the defect is significant and the building is relatively new, it is worth checking whether the owners corporation has already raised the issue with the builder or is pursuing its own claim before you start a separate one.

Practical Steps After You Discover a Defect

Document the defect thoroughly with photographs and, where relevant, a written assessment from a qualified tradesperson or building inspector. Check your settlement file and the original contract of sale for any disclosure statements, inclusions and exclusions list, or special conditions that relate to the defect, since these documents often clarify what was and was not represented at the time. Contact your conveyancer to discuss whether the defect falls under a statutory warranty, a misrepresentation claim, or neither, before you spend money on repairs that might otherwise be recoverable from a builder or seller.

When to Get Specialist Advice

Minor defects are usually best absorbed as part of ordinary property ownership, but anything structural, safety related, or expensive to fix deserves a proper assessment of your options before you proceed. Time limits apply to most claims, whether under a statutory warranty period or general consumer protection law, so delaying too long can close off options that would otherwise have been available. A conveyancer who handled your purchase can point you toward the right regulator or specialist advice for your specific state and type of defect.

Learning From the Experience

While a defect discovered after settlement is frustrating, it is also a useful reminder of how much a thorough pre-purchase inspection and contract review matter for your next transaction, if you buy again in future. Engaging a conveyancer who takes the time to explain what a building and pest report does and does not cover, and what disclosure obligations apply in your state, reduces the chance of an unpleasant surprise down the track.