REIV/LIV Contract Changes: What Home Buyers Should Know

When purchasing a property in Victoria, one of the most important steps in the due diligence process is arranging a pre-purchase building inspection. These inspections help buyers understand the condition of a property before committing to the purchase.

Recent updates to the REIV/LIV Contract of Sale of Land (September 2025 edition) have introduced important changes to the way building inspection reports are handled under the standard contract. These changes affect who can prepare a compliant report and how inspection findings may influence the contract.

For home buyers and sellers, understanding these updates can help avoid confusion and ensure inspections are carried out correctly.

Under the standard Victorian Contract of Sale, General Condition 21 covers building inspection clauses. This condition allows buyers to make the purchase conditional on receiving a satisfactory building inspection report.

Recent updates have clarified two key areas:

Who is qualified to prepare a building report

What type of defects may allow a buyer to withdraw from the contract

These updates aim to ensure that building reports used in property transactions are prepared by appropriately qualified professionals and follow recognised Australian standards.

Previously, the wording in contracts referred more broadly to a “building practitioner or architect.” The updated clause now clearly defines the types of professionals who may prepare a compliant building inspection report.

A report may now only be prepared by one of the following:

A registered building surveyor

A registered building inspector

A registered domestic builder

An architect

This change helps ensure that inspection reports relied upon in property transactions come from qualified and appropriately registered professionals.

Another important clarification is that building inspection reports must now comply with Australian Standard AS 4349.1–2007 – Pre-Purchase Inspections of Residential Buildings.

This standard establishes the framework for how inspections should be conducted and reported. It defines:

The scope of the inspection

Limitations of what inspectors can access

Standard terminology and defect classifications

The difference between minor and major defects

Most professional property inspections in Victoria already follow this standard, but the contract now clearly requires reports to be prepared in accordance with it.

While the contract changes relate to the inspection process rather than a specific defect, there are several practical issues that commonly arise when inspections are not properly understood.

These include:

Reports prepared by unqualified or unregistered individuals

Reports that do not follow AS 4349.1 inspection standards

Misunderstandings about minor versus major defects

Buyers expecting inspectors to assess items outside the inspection scope

Disputes when a report identifies defects but does not meet contract requirements

Being aware of these issues helps both buyers and sellers manage expectations during the inspection period.

If the contract requirements are not followed correctly, several problems may occur during the property transaction.

Potential risks include:

Contract disputes
If a report is not prepared by a qualified professional, it may not satisfy the contract condition.

Misinterpretation of defects
Buyers may assume any defect allows termination, when typically only major structural defects trigger the clause.

Delays in settlement
Incorrect or incomplete reports can delay the transaction while additional inspections are arranged.

Financial consequences
Buyers may miss important structural issues, or sellers may face unexpected renegotiations.

Understanding the inspection process helps reduce these risks and allows transactions to proceed more smoothly.

If you are purchasing a property and your contract includes a building inspection condition, the following steps can help ensure the process runs correctly.

Arrange a qualified inspection

Ensure the inspection is carried out by a properly qualified professional such as a registered building inspector, surveyor, architect, or domestic builder.

Confirm the report follows Australian Standard AS 4349.1

This ensures the inspection is conducted according to recognised industry guidelines.

Review the findings carefully

Pay particular attention to any major structural defects, safety concerns, or issues requiring further investigation.

Consult appropriate professionals

If defects are identified, you may need advice from specialists such as builders, engineers, plumbers, or electricians.

Address concerns within the contract timeframe

Inspection conditions usually have strict time limits. Any decisions about proceeding with the purchase must be made within this period.

Plan for future maintenance

Even if the property is structurally sound, the report may highlight maintenance items that should be addressed over time.

A professional building inspection provides an independent assessment of a property's visible structural condition at the time of inspection.

Many issues within residential buildings are not immediately obvious. Problems such as structural movement, moisture damage, or subfloor deterioration may only become apparent during a systematic inspection.

In many cases, problems that appear minor on the surface may be more significant beneath the surface. An inspection provides buyers with clearer information to make informed decisions about the property.

The recent REIV/LIV contract updates are designed to strengthen the reliability and consistency of building inspection reports used in Victorian property transactions. By clarifying who can prepare reports and requiring compliance with Australian inspection standards, the changes help ensure buyers receive professional and dependable advice about a property's condition.

For buyers, sellers, and agents, understanding how these rules apply can make the inspection process smoother and reduce the risk of disputes during the purchase.

If you’re concerned about the condition of your home or a specific structure, contact Red Dog Property Inspections. We’re here to help ensure your property remains safe, compliant, and well maintained.