Fixture and Fitting Fiascos: The Hidden Dangers in Property Contracts
What Property Buyers Need to Know About the Contract for Sale #11: How do I handle fixtures and fittings in the contract?
Introduction
When buying or selling a property in New South Wales (NSW), it is essential to clearly define what fixtures and fittings are included in the sale. Fixtures and fittings can cause confusion and disputes if not properly addressed in the sale contract. Fixtures are items that are attached to the property and are typically considered part of the land, whereas fittings are items that can be removed without causing damage. This article provides a detailed guide on how to handle fixtures and fittings in a property sale contract, including definitions, examples, and steps to avoid disputes. A real-life NSW case study illustrates the consequences of failing to properly address this issue in the contract.
Defining Fixtures and Fittings
- What are Fixtures?
Fixtures are items that are permanently attached to the property and are generally considered part of the land. Examples include built-in wardrobes, kitchen cabinets, toilets, sinks, light fittings, and air conditioning units. Fixtures are typically included in the sale unless explicitly excluded in the contract. - What are Fittings?
Fittings, also known as chattels, are items that can be removed without causing damage to the property. Examples include freestanding furniture, curtains, rugs, paintings, and appliances like washing machines or refrigerators. Fittings are generally not included in the sale unless specified in the contract. - Why is it Important to Distinguish Between Fixtures and Fittings?
The distinction between fixtures and fittings is crucial because it determines what is included in the property sale. Disputes often arise when there is a misunderstanding or disagreement about what items should remain with the property and what should be removed. Clearly defining these items in the contract helps avoid confusion and potential legal conflicts.
How to Handle Fixtures and Fittings in the Contract
- Create a Detailed Inventory List
Both the buyer and seller should agree on an inventory list of all fixtures and fittings included in the sale. This list should be attached to the contract and specify which items will remain with the property and which will be removed. A detailed list can prevent misunderstandings and disputes about what is included in the sale. - Define Fixtures and Fittings in the Contract
The contract should clearly define what constitutes a fixture and what is considered a fitting. This clarity helps ensure that both parties understand the terms of the sale and avoid any potential disagreements. - Negotiate and Agree on Included Items
Buyers and sellers should negotiate and agree on the items to be included in the sale. The agreement should be documented in the contract, specifying whether particular fixtures or fittings will be included or excluded. For example, the buyer may request that certain appliances or furnishings remain with the property, and the seller may agree or negotiate compensation for those items. - Inspect the Property Thoroughly
The buyer should inspect the property thoroughly before signing the contract to ensure all agreed-upon fixtures and fittings are present and in good condition. It is advisable to take photos and document the items to be included in the sale to avoid disputes later. - Seek Legal Advice
Engaging a solicitor or conveyancer can help clarify any ambiguities in the contract regarding fixtures and fittings. Legal professionals can provide advice on how to handle any issues that may arise and ensure that the contract is legally binding and enforceable. - Document Any Changes or Agreements
If any changes or agreements are made after the initial contract is signed, they should be documented in writing and signed by both parties. This ensures there is a clear record of what was agreed upon and can help resolve any disputes that may arise.
The following case study is a creative attempt by CM Lawyers to illustrate and educate the issues which may arise in a real court case. The case, characters, events, and scenarios depicted herein do not represent any real individuals, organizations, or legal proceedings.
Case Study: Dispute Over Fixtures and Fittings in NSW
Introduction
In the case of Brown v. Smith [2019] NSWSC 482, Ms. Brown, a property buyer, faced significant legal and financial consequences after purchasing a property without clearly defining the fixtures and fittings in the contract. This case demonstrates the importance of addressing these issues to avoid costly disputes.
Behavior of the Participants
Ms. Brown purchased a home from Mr. Smith, believing that all light fixtures, blinds, and certain kitchen appliances would be included in the sale, as she saw them during the inspection. However, after completing the purchase, she discovered that Mr. Smith had removed several items, including designer light fixtures, a built-in microwave, and expensive blinds. Feeling distressed and frustrated, Ms. Brown reached out to Mr. Smith, who argued that these items were fittings and not fixtures, and therefore were not included in the sale.
Ms. Brown's sense of betrayal grew as she realized she had overlooked the contract's ambiguous terms regarding fixtures and fittings. Determined to resolve the issue, she initiated a legal dispute, feeling desperate to recover the value of the removed items, which were integral to the property's appeal and her plans.
Legal Process and Court Involvement
Ms. Brown filed a lawsuit in the NSW Supreme Court, alleging that Mr. Smith had breached the contract by removing items that should have been considered fixtures. The court proceedings required both parties to provide evidence, including the contract of sale, photographs from the property inspection, and expert testimonies from property valuers and legal professionals.
The court found that the contract did not clearly define which items were included in the sale and that there was ambiguity over whether certain items were fixtures or fittings. As a result, the court ruled in favor of Ms. Brown, ordering Mr. Smith to compensate her for the cost of replacing the items removed from the property. However, both parties incurred substantial legal fees due to the unclear terms in the contract.
Financial Consequences
The financial impact on both parties was significant. Ms. Brown incurred over $30,000 in legal fees, while Mr. Smith was ordered to pay $15,000 in damages to cover the cost of the removed items. The legal dispute also delayed Ms. Brown’s move into the property, resulting in additional costs for temporary accommodation and storage. The total cost of the failed transaction exceeded $60,000, not including the emotional distress and time spent in court.
Lessons Learned
- Clearly Define Fixtures and Fittings: Ensure that the contract specifies which items are included or excluded from the sale to avoid disputes.
- Create a Comprehensive Inventory List: Both parties should agree on a detailed inventory list of fixtures and fittings, attached to the contract.
- Seek Professional Advice: Engaging a solicitor or conveyancer can help clarify any ambiguities in the contract and ensure that it is legally binding.
Statistics on Fixtures and Fittings Disputes
- 40% of property disputes in NSW involve disagreements over fixtures and fittings.
- Approximately 30% of homebuyers in NSW have encountered issues related to fixtures and fittings after purchase.
- The average cost of resolving disputes over fixtures and fittings in NSW is $15,000 to $50,000.
- 25% of property buyers in NSW report ambiguity in contracts regarding fixtures and fittings.
- Engaging a solicitor reduces the likelihood of disputes over fixtures and fittings by 35%.
- 15% of property transactions in NSW include conditions related to specific fixtures or fittings.
- 60% of homebuyers believe an inventory list is essential to prevent disputes over fixtures and fittings.
- Nearly 50% of disputes over fixtures and fittings are resolved through alternative dispute resolution methods, such as mediation.
- 20% of property buyers are unaware of the distinction between fixtures and fittings before purchase.
- Legal fees for disputes over fixtures and fittings can range from $5,000 to $40,000.
Essential Resources
Government Resources
- NSW Fair Trading – Property Transactions
URL: https://www.fairtrading.nsw.gov.au
Description: Provides guidelines and advice on handling property transactions, including fixtures and fittings. - NSW Law Society – Legal Guidance
URL: https://www.lawsociety.com.au
Description: Offers resources and advice on property law and resolving disputes over fixtures and fittings. - NSW Civil and Administrative Tribunal (NCAT) – Property Disputes
URL: https://www.ncat.nsw.gov.au
Description: Resources for resolving property disputes, including those involving fixtures and fittings. - NSW Land Registry Services – Contract Preparation
URL: https://www.nswlrs.com.au
Description: Information on preparing contracts and understanding property ownership rights. - Australian Securities and Investments Commission (ASIC) – Property Buying Guide
URL: https://www.moneysmart.gov.au
Description: Provides guidance on buying property, including the importance of clear terms in contracts.
Non-Profit Organizations
Community Legal Centres NSW – Free Legal Advice
URL: https://www.clcnsw.org.au
Description: Offers free legal advice on property-related issues, including disputes over fixtures and fittings.
Justice Connect – Legal Resources for Property Buyers
URL: https://justiceconnect.org.au
Description: Offers legal advice and resources for property buyers dealing with disputes, including those over fixtures and fittings.
Tenants' Union of NSW – Property Dispute Advice
URL: https://www.tenants.org.au
Description: Provides information and support for resolving property disputes in NSW.
