5 things to remember about chattels and fixtures

by: Mark Weisleder - Real Estate Lawyer

The buyer notices that the oven is not working when they do their final home visit, 2 days before closing. Can the buyer refuse to close or hold back money to repair the oven? These are just some of the questions that I receive from anxious buyers during the course of a home purchase.

Here are 5 key lessons to remember:
1. The buyer cannot refuse to close a real estate deal if an appliance is not working, or if there are minor damages on 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 lawyer is also not permitted to decide on their own to hold back money to complete any repairs, unless the contract says so. In my experience, 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. Here is my advice to settle repair or damage issues: get an estimate for the damage and then have your lawyer send it to the seller 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. I am 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. Be reasonable and solve your problem.
4. What if the oven breaks down 2 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 lawyer the next day about your issue. Also consider buying after sale insurance protection to cover your home systems and appliances. Canadian Home Shield is a company that offers this type of protection at a reasonable price.
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 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 most cases.
When you understand the rules about chattels and fixtures and properly protect yourself, you should be able to minimize any problems that arise after closing.

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Roger Townsend

Roger Townsend

CENTURY 21 People's Choice Elite Realty Inc.
Under Contract with CENTURY 21 People's Choice Realty Inc., Brokerage*
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