One of the clauses that often gives rise to issues in the Agreement of Purchase and Sale, is the Chattels clause.
Set out below is the standard form OREA chattels clause:
4. CHATTELS INCLUDED:………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………… Unless otherwise stated in this Agreement or any Schedule hereto, Seller agrees to convey all fixtures and chattels included in the Purchase Price free from all liens, encumbrances or claims affecting the said fixtures and chattels.
The List
You will notice the open lines. This is to insert a list, or alternatively you could attach you own list: “See Schedule C”.
Ordinarily, chattels do not come with the property. They are the personal possessions of the Seller. They will be removed from the premises before closing. If you want them, then you will have to specify them. List them. Be accurate to avoid any possible confusion. Specify make and model number to avoid any problems with identification.
The default position is that they are “excluded”.
Reference to Fixtures
It seems odd that in a paragraph dealing with chattels that there would be any reference whatsoever to fixtures. This doesn’t make any sense. Fixtures are part of the property and the default position is that they are “included”.
There is another paragraph, as there should be, dealing with fixtures that will be removed by the Seller. However, this reference here, is still odd.
Liens Free, Encumbrance Free, Claim Free
Since chattels are personal items, they are not part of the real estate and they are not subject to the mortgage. There might be another mortgage, lien or encumbrance which might apply. So that being the case, such a lien, or encumbrance (and this would include a chattel mortgage) would have to be removed.
There is one further matter and that is the reference to “claims”. This opens up somewhat of a “can of worms” here. Naturally, as you will appreciate, it is entirely possible that a third party could assert that they have a claim to the property. This could be a prior tenant. This could be the original owner. This could be a departed spouse. These claims relate to title or ownership.
There may also be claims relating to “recalls”, that is, for example, a request for the return of an appliance. A manufacturer could issue a request for a recall. The item might be now risky and carry with it an “explosion hazard”. Are these potential recalls to apply continuously, even after closing? What if the Seller is unaware of the recall notice?
This might be an issue that the Seller would wish to address in the Agreement. Sometimes, the chattels may have little to modest value, yet when the matter is contentious, we are frequently dealing with significantly higher replacement costs.
It would be wise to place a cap on the price. Again, this should be addressed in the Agreement. In some cases, it may be advantageous to simply provide them by way of a “quit claim”. In this way, there is no warranty concerning the chattels. They are simply “left behind”, they are what they are, including flawed title.
Brian Madigan LL.B., Broker
Comments 2
Hi Brian, I have an upcoming closing that is causing some issues. Upon visiting the home my clients retrieved a feature sheet that listed numerous upgrades and features of the home. One of these was a solar blanket and reel (clearly a chattel) and because it was listed as a feature of the home my clients are claiming it should remain on closing. The issue is difficult in that I never saw this feature sheet and I wasn’t aware that there even was a solar blanket and reel. It was only when it was included with a number of items that the seller tried to sell to my clients that we realized it wasn’t included. So, does a chattel that is described as a feature of the home make it into a fixture?
Author
Let’s go through your questions on a line by line basis:
“Upon visiting the home my clients retrieved a feature sheet that listed numerous upgrades and features of the home.”
The feature sheet is not part of the Agreement of Purchase and Sale unless it were attached.
All documents, whatever they may be are excluded by the “Entire Agreement” clause in the APS.
If it’s not specifically referenced, then it’s not part of the agreement.
“One of these was a solar blanket and reel (clearly a chattel) and because it was listed as a feature of the home my clients are claiming it should remain on closing.”
If the solar blanket is not referenced then it’s not suddenly “in” because of the feature sheet.
“The issue is difficult in that I never saw this feature sheet and I wasn’t aware that there even was a solar blanket and reel.”
Yes, likely without seeing this feature sheet, particularly if the purchase was made during the winter months, you would never have been aware of these two items.
“It was only when it was included with a number of items that the seller tried to sell to my clients that we realized it wasn’t included.”
Yes, I appreciate that it looks like you passed on the acquisition of these items. Does this mean that the Seller will want to take them to their new property? Probably not, the chances of a reasonably close fit would be rare. So, confirm with them that they can be left behind. They are not likely to get these items sold to someone else. The total brand new value is about $500.00. Second hand, who knows! But, not likely very much.
“So, does a chattel that is described as a feature of the home make it into a fixture?”
A chattel is a chattel and a fixture is a fixture, it doesn’t matter what you say.
However, what did you say in the agreement relating to the swimming pool? Did you add: “…..including all equipment…”? Would you have said something about the fact that “….. the swimming pool and equipment would be in good working order…”?
If either of those statements were made, that would open the door to interpretation as to what “equipment” was included or referred to, and it doesn’t matter whether they be chattels or fixtures.