June 2009

Residential Property - What is a chattel – what is a fixture?

When clients enter into an Agreement for Sale and Purchase of real estate, either as a Vendor or Purchaser, it is important to clarify exactly what is to pass on settlement by way of chattels. The standard chattels listed in the standard Agreement for Sale and Purchase form comprise the stove, fixed floor coverings, blinds, curtains, drapes and light fittings. Nowadays, and in addition to these, we see the inclusion of items such as dishwasher, waste disposal, tv aerial, rangehood, burglar alarm, heated towel rail, garage door openers and sometimes shelving, wallheaters etc. However, there is a very fine line between chattels and fixtures.

A chattel is generally considered not a fixture. The above items are considered standard chattels.

The law regards fixtures as being part of and affixed to the property being sold. These could comprise a garage, a carport, a gazebo, a garden shed bolted to a concrete floor, a swimming pool, and a spa pool set into the ground. However, if a Vendor wishes to remove a fixture before settlement, it must be expressly stated in any agreement.

If a Vendor removes a fixture, for example, a garden shed, on settlement, and which is not stated as being excluded in the agreement, this may create a defect in the title, and could delay settlement until the issue is resolved.

If a Vendor removed a stated chattel on settlement although this would not create a defect in title, it would certainly delay settlement, and perhaps an allowance would have to be made to the Purchaser for such items or indeed have the items returned.

Additionally there is provision in an Agreement for Sale and Purchase for a Vendor to warrant that any chattels are free and unencumbered, i.e. not subject to a financial contract. It is standard practice, when acting for a Purchaser, to carry out a search of the Personal Property and Securities Register to see if any financing statements have been registered against any chattels as mentioned in the Agreement.

In todays not so perfect world, most dwellings have a burglar alarm, and in many cases, the Vendor has a monitoring contract to go with the alarm. It must be expressly stated in the chattels if the Purchaser wishes to take over the monitoring contract. If it is not stated, then it is the Vendor’s responsibility to either cancel the monitoring contract (if the contract allows for this) or pay out the balance owing. It is not a debt that any Purchaser should be expected to be responsible for.

Whether you are a Vendor or a Purchaser of a property, it is essential that you put your mind to the issue of fixtures and chattels. Some issues to consider are:

  • If you are uncertain of a particular item’s classification, include it as a chattel;
  • If a Vendor specifically wants to exclude an item from the sale, write that exclusion into the agreement for Sale and Purchase;
  • If chattels are being sold, then check that they are satisfactory for their intended use – check that the stove actually works;
  • Make sure that the chattel’s list covers everything intended to be purchased.

If in doubt, check with us before signing any Agreement.