One of the problems using precedents is the fact that there is often “one stop shopping”, or “one size fits all”.
That simply doesn’t work when we are talking about real estate, buildings and the chattels that go with the sale.
First, let’s distinguish between two categories: chattels and fixtures. Essentially, fixtures are part of the property and chattels are independent items which need to be listed.
A similar issue in terms of “the condition of the items” will arise when we are talking about operating equipment, like furnaces and air conditioning systems. However, we will deal with them separately.
Right now, the issue is to come up with a series of clauses that would be suitable.
Old worn out Chattels with No Value
Basically, there should be no warranty at all. These should be “as is” and at the Buyer’s risk.
Medium Range Chattels of Value
These particular ones should be identified. A cap should be placed on their value. A clear warranty for a specific time should be placed in the Agreement of Purchase and Sale.
New Chattels with Value
These particular items have high value. They should work, or they should be fixed by the Seller. In many cases, they will still be under warranty. That warranty from the manufacturer or the installer should be transferred to the Buyer, and the Buyer’s remedies perhaps limited to the warranty.
Placing the Chattel in the Right Category
Let’s go to the kitchen. All the original appliances were installed 10 years ago. They have all depreciated significantly. The new dishwasher is 2 months old and the fridge is 18 months old. The stove and the microwave are both 10 years old.
If you are selling the house, effectively, you should have three different categories as noted above:
- Stove and microwave: no warranty,
- Fridge: limited warranty, it should work for a while, and there should be a cap on its value,
- Dishwasher: simply assign the manufacturer’s warranty.
These would be reasonable approaches, however, all too often there is one broad based warranty which applies to all the appliances. What I am suggesting is an item by item approach.
The trouble is always that the broad warranty has been given for the appliances largely due to the fact that the dishwasher was new. However, within days, it was the stove which broke down, but it was already 10 years old.
You will find that some agents are seeking broad based warranties on everything for the Buyer clients and some agents are selling chattels “as is” when really, the seller wants extra money for some of them.
Let’s try to find a happy medium out there!
Brian Madigan LL.B., Broker