Legal Comment by Mark Illidge

March 2007

Occasionally property buyers are upset after settlement because the property they just purchased does not include fixtures that were inspected at the time the contract was entered into.  This situation should not occur if the contract is properly drafted and the buyer exercises their rights under the contract prior to settlement.

From a legal standpoint the distinction between a "fixture" and a "chattel" is that a fixture is realty and a chattel is personality.  A fixture is part of the land, and accordingly the realty, and therefore should pass with the sale of the property.  Chattels on the other hand are personal property, and may be taken by the seller unless the contract of sale provides otherwise.

This all sounds simple enough, however, many disputes have resulted from one party to a sale ‘misunderstanding' the distinction.

In deciding the distinction between a fixture and a chattel the courts consider a number of relevant factors including:

• whether the item can be removed without substantial damage to itself or the real estate to which it is attached;
• the length of time the item is intended to be attached to the land; and
• whether it is conventional to remove the item on the sale of the property.

The items which appear to create most confusion include air-conditioning units, dishwashers, water pumps, tanks, sound systems and sails.

To avoid potential confusion and disputes these matters should be addressed when the contract is entered into.  A simple clause in the contract stating that the item is included or excluded will put the matter beyond doubt.  Furthermore, buyers should take advantage of their contractual right to inspect the property immediately prior to settlement.  You can then ensure that the property is in the same condition as it was when you entered into the contract.

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