Finding out a property has major defects before settlement can feel like a gut punch — but it's exactly why getting a pre-purchase building inspection is so important. In New Zealand, discovering significant issues before you sign on the dotted line gives you real leverage and legal options, rather than being stuck with costly surprises after the keys change hands.
What Counts as a Major Defect?
Not every issue flagged in a building report is a deal-breaker. Inspectors typically categorise findings by severity. Major defects are those that:
- Affect the structural integrity of the building (e.g. foundation movement, rotting framing, significant roof damage)
- Pose a health or safety risk to occupants
- Require urgent or expensive remediation — often costing thousands of dollars
- Indicate weathertightness failures (leaky building syndrome remains a significant issue in NZ)
Minor defects — like a dripping tap or a stiff door — are normal wear and tear and rarely affect settlement negotiations. It's the big-ticket items that change the conversation.
Your Options When Major Defects Are Found
Once your inspector delivers a report showing major defects, you generally have several paths forward. Which ones are available to you depends heavily on how your sale and purchase agreement is worded.
1. Renegotiate the Purchase Price
The most common outcome is going back to the vendor and asking for a price reduction that reflects the cost of remediation. You'll want quotes from qualified tradespeople to back up your position. A vendor who wants the sale to proceed will often negotiate rather than lose a buyer.
2. Request Repairs Before Settlement
You can ask the vendor to fix the defects before settlement. Be cautious here — insist that repairs are completed by licensed tradespeople and that you receive documentation (e.g. a Code Compliance Certificate or producer statements where applicable). Rushed or substandard repairs can create new problems.
3. Walk Away (If Your Agreement Allows)
If your agreement includes a building inspection condition (sometimes called a due diligence clause), and the defects are significant enough, you may be able to cancel the agreement and have your deposit refunded. This is why including a building inspection clause is strongly recommended — buying unconditionally is a major risk.
4. Proceed As-Is
Sometimes buyers decide to proceed anyway, armed with the knowledge of what repairs lie ahead. This can make sense if the price already reflects the property's condition, or if you have the skills and budget to manage the work.
The Role of Your Lawyer
This is not the time to go it alone. As soon as your inspector flags major defects, contact your lawyer immediately. They will:
- Review your sale and purchase agreement to confirm your rights under the inspection clause
- Advise on timeframes for raising concerns with the vendor
- Help you draft any formal notices or requests
- Ensure any agreed remediation or price adjustment is properly documented
NZ property law and contract conditions can be complex, and missing a deadline in your agreement could cost you your right to act on the findings.
Understanding the Building Report Itself
NZ building inspectors follow established inspection standards and should provide a written report that clearly describes defects, their location, likely cause, and recommended action. A good report will distinguish between urgent issues, items to monitor, and general maintenance recommendations.
If you're unsure what a finding means, ask your inspector to explain it in plain language. You're paying for their expertise — use it. BRANZ publishes useful technical guidance on common building defects and construction standards that can help you understand what you're dealing with.
Weathertightness and Leaky Buildings
Weathertightness defects deserve special mention in the NZ context. Properties built roughly between the late 1980s and mid-2000s using monolithic cladding systems (such as stucco or fibre cement without adequate detailing) can be at elevated risk of moisture ingress. Remediation costs can run into the hundreds of thousands of dollars.
If your inspector flags potential weathertightness issues, consider commissioning a specialist weathertightness report or moisture testing before proceeding. MBIE Building Performance has guidance on weathertight homes and the remediation process.
What About Consented Work and Code Compliance?
Your inspector may also flag building work that appears to have been done without a building consent, or work that doesn't comply with the NZ Building Code. This is a serious red flag. Unconsented work can:
- Create liability for the new owner
- Affect your insurance cover
- Need to be remediated or retrospectively consented at your cost
Always check the property's LIM (Land Information Memorandum) from the council alongside your building report. Your lawyer or the council can advise on how to handle unconsented work.
When to Call a Professional
If your building inspector finds major defects, you should immediately involve:
- Your lawyer — to protect your contractual rights
- Specialist tradespeople — to provide remediation quotes (builders, roofers, waterproofing specialists as needed)
- A licensed building practitioner (LBP) — for structural or weathertightness assessments; find qualified practitioners at LBP
- Your local council — if consenting issues are involved
For electrical or plumbing defects flagged in the report, only licensed professionals can carry out restricted work. Check licensing at EWRB for electricians and PGDB for plumbers and gasfitters.
A qualified local building inspector or tradesperson can be found through tradedirectory.co.nz to help you assess your situation and move forward with confidence.
Sources & Further Reading
- MBIE Building Performance — NZ Building Code and compliance
- BRANZ — Building research and technical guidance
- Licensed Building Practitioners — Find a licensed professional
- EWRB — Electrical Workers Registration Board
- PGDB — Plumbers, Gasfitters and Drainlayers Board
- Consumer NZ — Buying a home guidance
Licensed Building Practitioner (LBP)
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