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WHAT’S IN THE PURCHASE AND SALE AGREEMENT? (PART II)

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Here is the rest of the discussion in of the topic of the purchase and sale agreement.

Fixtures and Chattels
This is an area of potential dispute between the purchaser and vendor, unless it is sufficiently clarified. A fixture is technically something permanently affixed to the property; therefore, when the property is conveyed the fixtures are conveyed with it. A chattel is an object which is moveable; in other words, it is not permanently affixed. Common examples of chattels are clothes washer and dryer, refrigerator, stove, microwave, and drapes.

A problem can arise when there is a question of whether an item is a fixture or a chattel. For example, an expensive chandelier hanging from the dining-room ceiling, gold-plated bathroom fixtures or drapery racks, or television satellite dish on the roof might be questionable as to whether they are a fixture or a chattel. One of the key tests is whether an item was intended to be attached on a permanent basis to the property and therefore should be transferred with the property, or whether it was the intention of the vendor to remove these items and/or replace them with cheaper versions before closing the real estate transaction.

In general legal terms, if it is a fixture and it is not mentioned in the agreement, it is deemed to be included in the purchase price. On the other hand, if it is not a fixture and no reference is made to it in the agreement, then it would not be included in the purchase price. To eliminate misunderstanding, most agreements for purchase and sale have standard clauses built into them which state that all existing fixtures are included in the purchase price except those listed specifically in the agreement. In addition, a clause should list the chattels specifically included in the purchase price, and they should be clearly described.

Adjustment Date
This is the date that is used for calculating and adjusting such factors as taxes, maintenance fees, rentals, and other such matters. As of the adjustment date all expenses and benefits go to the purchaser. For example, if the maintenance fee has been paid for the month of March by the vendor and the purchaser takes over with an adjustment date as of the 15 of March, there will be an adjustment on the closing documents showing that the purchaser owes half the amount of the prepaid maintenance fee to the vendor for the month of March.

Completion Date
This is the date when all documentation is completed and filed in the appropriate registry office, and all monies are paid out. The normal custom is for all the closing funds to be paid to the purchaser’s solicitor a few days prior to closing. As soon as all the documents have been filed in the land registry office and confirmation has been obtained that everything is in order, the purchaser’s solicitor releases the funds to the vendor’s solicitor/

Possession Date
This is the date on which you are legally entitled to move into the premises. It is commonly the same date as the adjustment and completion date. Sometimes the possession date is a day later in order for the vendor to be able to move out; in practical terms, though, many purchasers prefer the adjustment, completion, and possession dates to be the same, if it can be arranged. One of the reasons is that the risks of the purchaser take effect as of the completion date, and there is always a risk that the vendor could cause damage or create other problems in the premises if he or she remains there beyond the completion date. As soon as your solicitor has advised you that all the documents have been filed and money has changed hands, your realtor or lawyer arranges for you to receive the keys to the premises.

Merger
This is a legal principle to the effect that if the agreement for purchase and sale is to be “merged” into a deed or other document, the real contract between the parties is in the document filed with the land registry. To protect you, it should be stated in the agreement for purchase and sale that the “warranties, representations, promises, guarantees, and agreements shall survive the completion date.” There are exceptions to the document of merger in cases of mistake or fraud–technical areas that require your lawyer’s opinion– but it is important to understand the concept.

Commissions
At the end of most purchase and sale agreements there is a section setting out the amount of the commission charged, which the vendor confirms when accepting an offer.

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