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Property Law: Ray & Dulcie

10 years ago Ray and Dulcie bought a section in an up-market area to build their dream home.  They used all top-of-the-line materials, fittings and furnishings throughout.  Ray and Dulcie recently decided it was time to downsize and move closer to their children.  They placed the property on the market and within two weeks were presented with an unconditional agreement.  They were delighted with the quick result.  

On the day before the settlement day the purchasers carried out a pre-settlement inspection of the property.  Ray and Dulcie were then informed that the purchasers had tried to turn on the spa bath in the main bathroom but could not get it to work.  The spa bath was top-of-the-line when the home was built and was tiled in but Ray and Dulcie had not used the spa mechanism for many years.  They were unconcerned and expected simply that the pump had seized from lack of use and needed to be replaced.  

Ray and Dulcie urgently called a plumber to inspect the spa bath and were then told after the plumber had removed some of the tiles and inspected the spa mechanism that the whole pump and plumbing system no longer worked.  They were told it would be a lengthy and expensive exercise to remove all the tiles and replace the faulty spa mechanism.  The plumber was concerned that damage to the tiles would be unavoidable if he proceeded with further investigation and/or repair and since the tiles were no longer available, the bath area would need to be completely retiled.  It was impossible to have the repair work completed in time for settlement. 

The agreement did not list the spa bath or pump equipment as chattels.  

Litigation “loomed” as to whether the spa bath was a chattel and subject to the “good working order” warranty or a fixture and subject to an actual or implied warranty that it was a working spa bath.  To avoid the prospect of litigation and the consequent risk and expense Ray and Dulcie were able to compromise with the purchaser to reduce the sale price by way of compensation.  

We recommend that before placing a property on the market you thoroughly check that all chattels and fixtures are in working order – whether or not they are to be listed as chattels – and either rectify the faults or ensure that they are clearly disclosed in any sale agreement.

Rachel Lee is a Legal Executive in the property team at Davenports Harbour.  She is an Associate member of the NZ Institute of Legal Executives.  Rachel and the Property Team manage a wide range of property matters from simple residential sales and purchases through to complex apartment developments, banking security and restructuring. Contact Rachel Lee at Davenports Harbour Lawyers on 915 4387 or Email: rachel.lee@davenportsharbour.co.nz.

by Channel Magazine

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