Surely they have to fix that?

Not necessarily.  So be very, very nice to them when you ask them to fix it.

What am I talking about?  Chattels.  Things sold to you with the house that aren’t an integral part of the building (this is simplistic, but we’ll run with it for the purposes of this post).  A lot of this also applies to the house itself and its fixtures and fittings, but insurance clauses also come into play there, so this post will stick to chattels.

Every now and then a purchaser will do their pre-settlement inspection and complain to us that something isn’t working….let’s say the sensor on the security lights doesn’t trigger.  They wish us to require the vendor to fix it.

Unfortunately, the standard ALDS agreement for sale and purchase does not require chattels to be put into working order if they weren’t already.  Chattels are only required to be in the same condition as when you bought the building.

In other words, if it was broken when you signed up, that’s all you are entitled to on settlement.  We can’t stress enough the need to try those switches when going through your dream house purchase and before signing up.  Check out the swimming pool pump.  Does the HVAC work?  Security system?  Stove?  Range-hood?  Does the hot water come on quickly or take an age?

If  you simply don’t know whether something was already broken, we will of course put it to the other side with a polite unembellished request to fix or enter into discussions, but the comeback may be that they have no liability.  If you haven’t pushed and prodded before entering into the agreement, you as a purchaser have very little evidence to dispute the vendor’s claim.

Where you know that the chattel was non-functioning pre-settlement, the purchaser is in our view better off asking the vendor personally, very, very nicely, if they will fix it, before the vendor’s lawyer informs them that they don’t have to.  Vendor’s are, after all, usually reasonable people like the rest of us, and you would be surprised how many will actually go out of their way to sort matters out.

Unfortunately, the reasonable vendors of this world are balanced by the unreasonable vendors who unscrew all the lightbulbs and remove the toilet-roll holders before leaving, but that is a whole other post!

The same thing applies to cleaning.  A vendor is not required to present a clean and tidy house.   Most vendors will do so, out of simple pride if nothing else and we thoroughly agree with that, but they don’t have to.  This can come as a considerable surprise to a purchaser who holds higher standards.

There is another point to remember with chattels, and that is if the vendor is required to fix them…because they were working when you signed up….you are not able to make settlement conditional on the problem being fixed.  Purchaser clients will often wish to refuse to settle unless the stove or security lights or whatever are fixed, but the ADLS agreement specifies that breach of warranty (it is a “warranty” of the vendor that chattels will be in the same condition (fair wear and tear aside) as when you signed up) does not entitle cancellation or refusal to settle.

Instead, you need to work with your lawyer to negotiate either a reduction in the purchase price (and do the work yourself) or a rentention held in trust pending the vendor getting the items fixed, failing which they forfeit the retained funds to you.  The retention is better, because it is usually more than the work will actually cost, giving the vendor every motivation to get the work done.  The negotiation aspect will be on how much money is retained, and how long the vendor has to fix things up.


About Ivan McIntosh

I am a partner of Carter Atmore Law...residing in City Road just off the busy thoroughfare of Symonds Street, Auckland, New Zealand....where we are specialist business & property development lawyers, working for both local and international clients. Proud husband to Joanna, and dad to two sons. Passionate rugby supporter. Email: Ph: 64 9 921 5026
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