Settlement Part 2

Brian Cannan: We're here today talking to Greg Jemmeson from Jemmeson Fisher Solicitors and Accountants. Hi Greg.

Greg Jemmeson: Hey Brian.

Brian: Well today's subject is about settlement and probably just after settlement. What happens if the vendor takes some of the fixtures and fittings or even the plants or changes the dishwasher to not what it was? What can the purchaser do?

Greg: It's a perennial problem Brian and unfortunately the poor old agent is the one who gets lumbered with the problem.

Brian: All the time!

Greg: What really needs to happen here is that agents need to let the vendors know that the property once it exchanged that is the condition the property must be in at settlement. Okay? And clearly set out with them what is attached in the contract, fixtures and fittings, what is being left and that they have to remain in that same condition. One of the things you know obviously that the common things are things like dishwashers and stoves and dryers and they need to be clearly identified as to whether they're staying or not whether they're exclusions or inclusions. The old rule with fixtures and fittings is essentially anything that requires a tool to remove it would make it a fixture so if you wanted to dig up the rose garden and take all of those roses out of the garden bed they're fixtures but if they're in a pot and easily movable then they're not. Again prior to completion the agent needs to organize for the purchaser to actually make an inspection of the property to ensure that the property is in the same condition as when they exchanged contracts and that all of those fixtures and fittings are still there and in workable order. What then happens is if certain things have been removed then that's a position then for the solicitors particularly the purchaser's solicitor to say well I'm holding back funds at settlement until either this damage is rectified or we are compensated for the loss of the rose garden or for the removal of the brand new dishwasher and replacement with an old dishwasher those have to be done prior to completion.

Brian: What happens if it has settled and they did the inspection beforehand, the final inspection, but when they came back after settlement something had gone?

Greg: Okay this is where it becomes complicated because then it becomes a contractual dispute and quite often the cost of trying to pursue a four-hundred-dollar piece of equipment far exceeds the value and the cost of the litigation so again what we really need to do here is the purchaser and needs to do the inspection as soon as practicable before completion so if completion is at midday that day they should be doing the inspection that morning not after completion has already occurred. In these instances where things like that happen in the past I think the best way I've seen these remedies quite often the agent puts his hand in his pocket rectifies the problem and what happens there is they keep the purchaser on site as a potential future client. Easy for me to say because it's the agent's money, but coming from a practical point of view it is sometimes a lot cheaper to do that, then let the purchaser get into some litigated dispute with the vendor so at the end of the day, it will always be the agent's fault regardless.

Brian: Well thank you Greg. I'm not sure I like the idea of the agent having spent money but I can see the practical solution to that. Thank you for that advice.

Greg: Thank you Brian.