Things are now getting more concerning. After send the formal email to the realestate agent cancelling contract she replied saying do we want to give owners the chance to fix it. Contract had two options a) to cancel immediately or b) submit a significant defect report. We did option a). We replied again saying no we want to exercise our right to cancel the contract. Since than we havent heard anything from the realestate agent. Turns out instead she has gone to our settlement agent (who has already sent us a formal letter saying they have been advised settlement will not  be continuing) and discusses the report over phone saying they do not think it is significant.

Received a a forwarded email saying the settlement agent will call the building inspector. Have i missed something!! Im really not happy that the realestate agent has gone behind my back. I consider this unethical and unproffessional. All other corespondance was to us CC'ing settlement agent in and now I believe deliberately left me out.

Going to write back that we have exercised option a) and the deposit money should be returned. Seems the contract does not give a time frame to when the money should be returned. So im assuming a "reasonable" time will be used. How long would be a "reasonable" time to have the deposit returned. Thinking I may  need to seek a solicitor.

Hi again. So decided to walk away mainly due to termite damage. Formerly notified realestate agent via email that i was terminating the contract. Now the vendors are questioning the building report and the qualifications of the building inspector. Stated they are not willing to accept the report and settlement date will still go ahead. Can they do that? He goes onto say that he knew of the termite damage but it is minor and was fixed to their satisfaction when they bought the house. Also with the wood member pulling apart seller says that this is common and due to timber shrinkage. They go on to say the cracked tiles are cosmetic and there is no water penetration.

Even if the termite damage visible is "minor" as there was insulation in the roof there is a possibility there is more damage hidden as beams were hidden by insulation. Im beginning to get worried and feeling more unsure of the house. Can they even reject the report. Goes on to say he will get a registered builder at his cost to review the building and fix the beam with termite damage. My worry is he appears to work for a building company group. Even the settlement agent was from the same company group as himself. Should they have disclosed the termite damage?

Also i have aready notified the bank i am not proceeding so finance was never approved anyway. With finance due next week probably wont make the finance deadline anyway. Will i lose my deposit.

Also Beedie cheers for your comment but dont have the money to subdivide now so the plan was actually to live in the house for at least 5 years.

Thanks for your help.

Cheers for the comments. The house is a good house and block has subdivision potential (triplex block if current house is demolished).  After speaking to the inspector he commented saying is was a small area affected and can be easily fixed.

Im still leaning towards walking away just for the fact not all beams were visible so who knows what is laying inder the insulation!

Thanks again! (bit of a property novice)