Are you looking at buying a property in Australia? There are a number of things you should know before signing the contract.
When a contract is entered into for the sale or purchase of land with an existing house or home unit on the land, with limited exceptions you are purchasing the land with that house or home unit. But what about items that could be removed from the land or from the house or home unit, such as a fridge, statue, shutters or a microwave?
These items are known as either fixtures or fittings, and depending on how an item is classed, may or may not remain with the property.
Generally speaking, a fixture is an item that is difficult to remove from the property, or one that would cause damage to the property in its removal. Fixtures might also be connected to gas or electricity, such as a water heater and usually require a specific trade for their installation or removal. Common examples of fixtures would be a stove, in-built wardrobe, or plantation shutters. In comparison, a fridge, albeit rather large is only plugged into an electrical wall socket and can be removed from the property without causing damage.
To simplify the process and avoid arguments over what a fixture or fitting may be, the contract for the sale and purchase of land allows for inclusions and exclusions to be listed on the front page of the contract. The inclusions listed are the common inclusions that could be expected to remain with the property, such as blinds, dishwashers, light fittings and the stove.
If you are purchasing a property, be sure to ensure that any items that you consider should remain with the property are listed as inclusions on the front of the contract. Similarly, if you are selling property and do not want items to be included in the sale of the property (that could otherwise be considered fixtures) such as stained glass windows or ornate door handles, it would be prudent to list those items as exclusions on the front of the contract.
Often contracts will include a special condition stipulating that the property and the items therein are sold in the condition that they are in on exchange of the contracts. It is in this context that an initial inspection of the property can be just as important as a final inspection of the property.
An initial inspection of the property should be undertaken to determine the condition of the property, and the items included in the contract. Without an initial inspection of the property it cannot be said that items found not to be working at a final inspection, were working prior to the exchange of contracts.
Whilst a final inspection (usually undertaken two to three days prior to settlement of the property) allows a purchaser to ensure that the property and items included in the contract is in the same condition as it was when contracts were exchanged (electricals still work, items still work and have not been removed, windows have not been broken, etc.).
If a fixture or fitting listed as an inclusion in the contract has been removed from the property, or you have undertaken an initial inspection and found that an item that was operating no longer operates at a final inspection of the property, you should contact your lawyer straight away. Your lawyer can then negotiate for the return of the item, or alternatively ensure that sufficient funds are retained on settlement to cover the cost of repair or replacement of the item.
If you are considering the purchase or sale of property and have queries concerning inclusions or exclusions to the property, you should contact your lawyer or conveyancer. If you do not have a lawyer or conveyancer, do not hesitate to contact the Commercial, Property & Estates section of Watts McCray Lawyers who can assist you with all areas of conveyancing/property law.