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In Good Working Order - Whose Responsibility?

Posted February 15th, 2009 under pitfalls, say what?, smart buying, smart selling.

Most Agreements of Purchase and Sale contain a little clause that reads:

“The Seller represents ... all chattels and fixtures shall be in good working order and ... this representation shall not merge on completion of this transaction, but apply only to the state of the property at completion of this transaction.”

This paragraph is widely misunderstood by sellers, buyers, and agents alike. Sellers are afraid that if something were to break the week after closing, that they would still be liable. Similarly, buyers think they can sue for damages if something breaks a week after they move in.

What really happens is this: on the day of possession, the chattels become the buyer's property. If the buyer discovers that the toilet is broken or the washing machine is not working, he must make this fact known to the Seller. So long as the buyer makes it known, he will have legal recourse to satisfy the shortcoming later, even after he has taken possession.

However, if the buyer does not make it known, or does not bother to inspect the house on the day of possession, he cannot pursue the matter a month or even a week later.

So, buyers can rest easy that they do have recourse so long as they notify the seller, and sellers can rest easy that there will be no surprises two weeks down the road which they were not notified of on the day of possession.

Got a question about damaged items and responsibility? Just ask me, I'll be happy to help.

--Peter

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