Real Estate Sales Contract. What is considered a Chattel?

Reviewing your Sales Contract before making an offer for the property is a must. You may, or may not have come across this term "Chattel". What is a Chattel?

It is important to understand what a chattel is, as this section lists what is included in the sales contract.

What is a Chattel in the Sales Contract?

According to definition, a Chattel is an object that is capable of being owned as personal property and is distinguished from real property (the house, the building and the land). There used to be a time where chattels are listed in the contract. Yes, someone went through the property and list every item you are getting together with the purchase. However, it seems that this is no longer in practice.

What does a Chattel in the Sales Contract refers to?

It refers to anything that is attached to the house, and this usually means anything that is unmovable without modifying or damaging the house.

What is considered a Chattel in real estate?

Generally speaking the fixtures you during an open for inspection is included in the sales contract. The chattels you see at open for inspections should be present during settlement. Typical chattels included in the purchase of the house includes:

• light fixtures

• ceiling fan / wall fan

• kitchen

• stove top and/or oven if they are built into the kitchen cabinet.

• curtains / blinds

• heating and cooling systems

• etc

What is a quick way to determine is anything is part of a Chattel?

Our Principal Buyers Advocates, Rayson has this quick trick to determine if anything forms part of a chattel: Picture this,

If you were to flip the house upside down. Anything that falls, is NOT considered a chattel.

Are there any exceptions or gray areas?

As with anything, there there definitely are gray areas. Typical gray areas, especially if they are built into a cavity in the house, include

• dishwasher,

• oven,

• sound and entertainment system

• home theatre systems

• TV sets

They are considered gray areas depending on how they are installed or not installed. Generally, if they are built into a cavity (typically a wall or built in cabinet), and cannot be removed without damaging the cavity, cabinet, walls, etc, they are considered a fixture, and should be included in the sale, by default. However, if they can be removed easily without damaging anything they would not be typically considered a chattel and thus, would usually be excluded in the sale.

If in doubt, ask the real estate agent or owner.

What happens when a Chattel is missing at handover?

When a chattel is missing or if you think it could be missing at handover or during final inspection, get in touch with your legal representative or conveyancer as soon as possible. As the contract has been signed and accepted by both parties, the legal team needs to be involved to resolve any discrepancies. The rule of thumb is, the earlier this is discovered, the higher the chance of this being clarified / resolved amicably without affecting the settlement dates. Possible solutions to missing chattels could be:

1. insist on the vendor replacing the missing chattel

2. reducing the final settlement by an amount equivalent to the replacement cost of the missing chattel

3. anything mutually agreed

4. do nothing

What happens when a Chattel appears to be different or is in a different condition at handover?

When a chattel appears is different or damaged at handover or during final inspection, get in touch with your legal representative or conveyancer as soon as possible. As above, as the contract has been signed and accepted by both parties, the legal team needs to be involved to resolve any discrepancies. What you need to ascertain is whether the discrepancies is indeed real and can be proven to be different. We had seen items being swapped for the same items of a lower value, or items being damaged/broken. For example, the black and gold plated $10,000 Bosch dishwasher might be replaced with a cheap homebrand from your neighbourhood supermarket. Most of the time, it could simply be a case of the original item might have malfunctioned, especially if the property is still being used, while awaiting an extended settlement. Some vendors would do the right thing by keeping the buyer informed that an item has malfunctioned and it will be replaced. Some better vendors might even discuss with the new owners what the replacement would look like.

If you can prove the item is a chattel and that they are different at handover, you have a case. Possible solutions to missing chattels could be:

1. insist on the vendor resolving the discrepancy with what it should be

2. reducing the final settlement by an amount equivalent to the replacement cost of the discrepancy

3. anything mutually agreed

4. do nothing

What happens if you are unsure what is part of the Chattel?

If you are unsure, clarify with the sales agent / seller. The sales agent and vendor probably did not thought of that as well, and they would have to clarify to ensure both seller and buyer are on the same page.

As part of our complete one-stop home and investment property buying service, we check and ensure chattels are checked and any gray areas clarified, on behalf of our clients.