On chattels and fixtures
Tuesday Oct 11th, 2016
A chattel is a moveable object that has not been “annexed” to the property in a legal sense.
For example, a stove is a chattel, but a chandelier is not. It is an electrical light fixture (shown as ELF in an offer). This leads us to understand that a fixture is anything that is attached to the property by nails or screws.
I always advise Buyers, on taking possession of the house they purchase, to check all appliances and ensure that they are in working order. Sometimes, however, the buyer notices that an appliance is not working when they do their final home visit, a couple of days before closing. Can the buyer refuse to close or hold back money to repair the appliance? These are just some of the questions of lawyers during the course of a home purchase. This information has been taken from advice given by a well known lawyer, Mark Weisleder.
1. The buyer cannot refuse to close a real estate deal if an appliance is not working, or if there is minor damage to the property, unless the contract says so. What the standard real estate contract says is that the buyer can only refuse to close if there has been substantial damage to the property before closing. This would cover a house burning down or a major flood before closing, but would not cover a cracked window or appliance that is not working.
2. The buyer, or the buyer’s lawyer, is also not permitted to decide, on their own, to hold back money to complete any repairs, unless the contract says so. Sellers rarely agree to any clause in an agreement that permits a buyer to hold back money, for example, to make sure that the seller has completed any required repairs before closing. The problem is that in practice, buyers will typically say that they are not satisfied with the repairs and the holdback money cannot be released to anyone.
3. Buyers are advised to settle repair or damage issues: get an estimate for the damage repair and then have your lawyer send it to the seller’s lawyer, offering to just settle the matter by the seller either fixing the problem before closing or the seller providing a credit equal to the estimate and the buyer fixes it themselves after closing. One is usually able to work this out with seller lawyers before closing. Unfortunately, if there is no settlement, there is no automatic right to hold back money and the buyer will be required to sue the seller in Small Claims Court after closing, to get their money back. This is not a good solution for anyone, because of the time it takes to go to court to resolve this.
4. What if the appliance breaks down a couple of days after closing? Unfortunately, the way the contract is written, the buyer does not get an extended warranty. The seller will typically only warrant that appliances and home systems will be working on closing, not after closing. Make sure that even if you are not moving in until a few days after closing that you go to your home immediately after closing and check to make sure that everything is working properly. If anything is not working or there is a damage, have your lawyer immediately contact the seller’s lawyer the next day about your issue. Also consider buying after sale insurance protection to cover your home systems and appliances. Contact me for guidance on such insurances.
5. Little things matter. If your seller is removing a chandelier, make sure they are required to replace it with a standard light fixture so you do not walk into a dark home on closing. If your seller is removing a TV bracket from the wall, make sure that they are required to fill in any holes that are created. Make sure you are to be given 2 full sets of keys, FOBs if it’s a condominium, garage door openers and mail box keys. If the agreement is silent, the seller may only get you one set and it is costly to obtain a duplicate set, in some cases.
When you understand the rules about chattels and fixtures and properly protect yourself, you should be able to minimize any problems that may arise after closing.