Question:
Is there an airtight furnace/AC/HWT rental buyout clause?
Answer:
Best clause is no clause at all.
Have a look at the standard form Agreement of Purchase and Sale. What does it say?
There are three sections:
- Chattels Included
- Fixtures Excluded
- Rental Items
“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.
5. FIXTURES EXCLUDED: ……………………………………………………………………………………………………………………………………………………….. ……………………………………………………
6. RENTAL ITEMS (Including Lease, Lease to Own):
The following equipment is rented and not included in the Purchase Price. The Buyer agrees to assume the rental contract(s), if assumable: ……………………………………………………………………………………………………………………………………………………………………………………….
The Buyer agrees to co-operate and execute such documentation as may be required to facilitate such assumption.”
The Equipment
In your question you raise both the central air-conditioning system, the furnace, and the hot water tank.
All three are “fixtures” not chattels.
You don’t want to take over the rentals.
So, they cannot appear in Paragraph 6, because here, the Buyer agrees to take over the rentals.
They do not appear in #4, since they are not chattels.
They do not appear in #5, since they are not excluded. They are all staying.
So, say nothing and the result is that the Seller will have to:
- Leave them behind since they are fixtures,
- Pay out the leases, since the Buyer is not taking them over.
Be sure to be careful and read the sections. Look at what #4 said:
“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.
Kindly note that it is very easy to make mistakes here!
Brian Madigan LL.B., Broker