Once a house is sold it’s important to know what legally can and can’t be taken by the seller. Buyers must understand that the property is sold “in the state it is found” unless the contract specifically says otherwise.
Introduction
When selling or buying a property, all ‘fixtures’ are included in the sale of a property without having to be mentioned specifically in the Contract of Sale. You can specifically exclude fixtures, however, if it is not specified in the Contract, the presumption is that the fixture is to remain in place and is sold with the property.
It is therefore important to understand what a ‘fixture’ is and what is a ‘chattel’.
What is a fixture and what is a chattel?
The general rules that apply to fixtures, is that an object will be considered a fixture where it is fixed to the property, or land, by any means other than its own weight. Where this is not the case the object will be considered a chattel.
Some typical fixtures you will find in a property include the hot water system, cooktop, fixed floor coverings and dishwashers. Any plants that are planted into the soil are also considered fixtures.
Fixtures form part of the property transaction and are included in the purchase of the property, while chattels remain the property of the seller and they will take them with them as part of their sale.
It’s important to be aware though, that while most objects fall under the above general rule, there are exceptions. This is where disputes between a buyer and a seller can arise as to whether an object is to be considered a fixture.
As detailed above, an object will in most cases, be a fixture where it is attached to the property by a means other than its own weight. However, in the eyes of the law, the purpose of the fixing is relevant and that it must be considered whether the object was fixed for the better enjoyment of the land and building, or whether the object was fixed to the land or property for the better enjoyment of the object itself.
Where an object has been fixed to the property for more effective use of the object itself, such as a basketball hoop attached to a garage wall, then it will not be considered a fixture. However, if the object is fixed for the better enjoyment of the property, such as a basketball pole attached to an inbuilt concrete court, then it will be considered a fixture.
How to determine what is a fixture or chattel?
Although it appears easy to differentiate between the two, in practice, there are many factors which will need to be considered when determining if something is a fixture of chattel.
Some factors that will decide if the item is a fixture or a chattel include:
The degree of annexation – that is, if the object is attached to the land by more than its weight, it would raise the presumption that it is a fixture. If not, you would presume it is a chattel.
The intention at the time it was fixed to the building or land – after the presumption has been raised, the party seeking to refute it has the burden of proving that the intention of the party (which affixed or did not affix the item) was that the object be a chattel or fixture despite being unattached or fixed.
Buyers should try to include in the agreement a clause that favours them a pre-closing visit to avoid disputes arising. It is important for buyers to use this visit to monitor and verify every fixture that should be left intact and therefore something they expect to be there upon moving in.
During the first home inspection, a buyer should take the opportunity to take photos of all fixtures (alongside the appliances’ serial number, if any). This can help keep track of every item upon moving in. If some are found missing/replaced, the buyer can then ask their property lawyer or the real estate agent for information.
As a real estate agent, it is important to be clear about what is a fixture within the house and what the seller intends to include with the sale. Having a solid proof or reference by way of photos and a list of serial numbers is better than simply assuming that items will remain. Real estate agents and potential buyers should only do this with the buyer’s approval.
Communication is the key to a smooth conveyancing process. This even extends to closing on your business deal with the seller. The only way to avoid any confusion or misunderstandings is a clear, solid communication with the seller.
A clear communication also means open discussion about everything regarding the conveyancing process. Don’t hesitate to ask questions to the seller, and even clarify any details with the conveyancer or property lawyer. It’s best to get the answers you’re looking for directly from authorities instead of researching on the internet of the possible answers.
Buyers must look for the conditions of all chattels and fixtures upon moving in to guarantee their top quality. Typically, sellers will assure that all chattels and fixtures will be on their “good working condition” upon renting. But this doesn’t guarantee any form of warranty over a period.
Determining chattels and fixtures may seem easy but remember that identifying such can sometimes be subjective to people. Always consider what the seller and conveyancer might have to say before making the final call of what the buyer should expect.
What should buyers, sellers and real estate agents do in circumstances of uncertainty/grey areas?
In circumstances of uncertainty, whilst obviously everyone can have a go at trying to apply the degree of annexation and object of annexation tests, it is suggested that instead, all of the affected parties would be far better advised to simply have a very thorough look around the property for any items that might potentially fall into this grey area (that is they might be capable of being determined to be either fixtures or chattels by application of these tests) and having identified these “grey items”, make it clear in all discussions between the Buyer and Seller as to whether the items are being included or excluded. In either case, the contract should specifically mention these items and record what has been agreed. In other words, is the relevant item agreed to be included in the sale or not, and, if not, then it will be the Seller’s obligation (and indeed right) to remove the item from the property at the point of settlement.
Consequences
In circumstances where this exercise is either overlooked or done poorly, the end result of disputes between Buyers and Sellers can become very uncomfortable for all parties given that the items in dispute usually are of insufficient value to warrant the cost of taking further legal action to try to resolve the issue and consequently, this usually has the affected parties turning back on the Real Estate Agent and/or the lawyers who might have been acting in the matter to try and recover their costs/losses from there.
Attwood Marshall Lawyers – ensuring best practice when drafting contracts in Queensland and New South Wales
Our experienced team of property lawyers can ensure fixtures and chattels are drafted correctly in the contract and will not leave buyers or sellers vulnerable to disputes or give rights to a party to terminate the agreement, sue for damages or claim compensation. We take the utmost care in reviewing contracts and encourage that this be done prior to anyone signing the dotted line. This gives clients access to quality advice when they need it most.
For property law and conveyancing advice, contact our team any time by calling Property and Commercial Department Manager, Jess Kimpton, on direct line 07 5506 8214, email jkimpton@attwoodmarshall.com.au, mobile 0432 857 300.
Our Property and Commercial Lawyers are available at our Coolangatta, Kingscliff, Robina Town Centre, Brisbane, Sydney and Melbourne offices. Need assistance outside regular business hours? Our Robina Town Centre office is also open Thursday nights until 9pm and Saturday mornings until 12noon.
Book an appointment with the team instantly online now.
Read more:
Special conditions in property contracts – the stakes are high if you get them wrong
Standard Conditions of the NSW Contract – beware of strata adjustments when acting for a Purchaser
Don’t let your fear of missing out (FOMO) stop you from doing your homework and getting the right legal advice before you sign up to buy!
