Recent Changes in the Agreement for Sale and Purchase of Real Estate

One of the key changes made in the new 10th edition is regarding vendor’s warranty of chattels/items included in the sale.

First, the term “items” is now used rather than “chattels” due to the fact that some of the items included in the sale may comprise fixtures, rather than chattels.

Second, the overall warranty regarding “chattels” is now split into two separate warranties. First in respect of items which do not have an operational function, such as blinds and fixed floor coverings, specified in Schedule 2, and second in respect of items which have an operational function, such as ovens and heat pumps, specified in Schedule 3.

Previously all items, whether operational or non-operational, are to be delivered to the purchaser “in reasonable working order”.

This has sometimes created ambiguity and confusion as not all items can be delivered in “reasonable working order” when they do not have any operational function.

Having two separate warranties therefore not only provides clarity but also allows purchasers to specifically request items that should be delivered in “reasonable working order” on settlement to be inserted into the agreement.

As a result, the new agreement no longer has any built-in warranty as there was in the old agreement. Any operational items must now be added to Schedule 3 in order for such a warranty to apply.

In practical terms, if you are a purchaser, you now need to carefully consider which items are included in the sale “as is, where is” and which are to be inserted as being in “reasonable working order”. This should assist purchasers to determine what condition the different items should be in during final inspection and help manage their expectations accordingly.

If you are a vendor, you now need to know which operational items can be delivered in “reasonable working order” and ensure that only those are listed under Schedule 3.

As a result, both parties should have more certainty regarding the condition of the specified items during final inspection day, saving them not only time and money but also stress!

Please feel free to contact our property team should you have any questions.