Buying or selling a home is a significant milestone in anyone’s life. However, amidst the flurry of paperwork and negotiations, it is important to understand the intricate details of the transaction, particularly regarding warranties, chattels, and fixtures in Alberta residential property sales. These terms hold immense importance in real estate transactions as they dictate what is included or excluded from the sale and the level of assurance buyers and sellers have regarding the property’s condition and contents.

Whether you are a first-time homebuyer, a seasoned investor, or a homeowner looking to sell, understanding the nuances of warranties, chattels, and fixtures is essential to ensuring a smooth and legally sound purchase and sale process. 

What are Fixtures?

A fixture refers to an item, feature, or object permanently attached (or affixed) to the property, even if it was not originally part of the property. Whether a fixture is attached to the house itself or affixed to the surrounding land, it is an integral part of the property. 

Fixtures are commonly nailed, screwed, cemented, glued, or bolted to the property and can include items such as lights and doorknobs. Fixtures are regarded as part of the property and are typically included in the sale of the property. Even if you can technically remove the item, for example, custom cabinets or a built-in entertainment center, it may still be considered a fixture. Buyers may be willing to pay more for a property with upgraded fixtures, while sellers may use fixtures as a selling point to attract potential buyers. 

What are Chattels?

Chattels are often referred to as personal property. They are movable items that are not permanently attached to the property. However, they may be included as part of the purchase or sale of residential property. 

Chattels can encompass various items, including furniture, appliances, curtains, and movable outdoor equipment like patio furniture. If an item can be easily removed from the property without causing damage or altering its structure, it is considered a chattel.

The parties’ intention in the transaction, as evidenced by the purchase and sale agreement or other conduct, may also influence whether an item is deemed a fixture or a chattel.

Inclusions and Exclusions

When negotiating a real estate transaction, buyers and sellers must specify which chattels are included with or excluded from the property. Generally, these inclusions and exclusions are outlined in the Purchase and Sale Agreement. To avoid confusion and future disputes, sellers should make a comprehensive list of chattels, as well as their condition, that they intend to include with the property, while buyers should take time to carefully review the included items to ensure it align with their expectations.

Impact on Purchase Price

The inclusion or exclusion of chattels can also impact the overall value of a property and may influence the negotiation process between the buyer and seller. For instance, a buyer may be willing to pay more for a property that includes high-quality appliances or desirable furnishings, while sellers may use chattels as a bargaining chip to maximize their dollar. 

Warranties and Representations

Warranties and representations in real estate have unique individual meanings and a collective contractual meaning, accompanied by a general promise to make the other party whole in the event of a breach. Warranties are guarantees or assurances given by the property’s seller to the buyer as to the condition of the property. It is a contractual promise from one party to another confirming that something is accurate. On the other hand, a representation is a statement from one party to another relating to a specific fact. In the real estate context, a representation may be made by a seller as to the condition of the property.

In Alberta, representations and warranties can be found in the standard contract the Alberta Real Estate Association prepared. However, these may be negotiable. If a representation or warranty turned out to be false, the party who made the statement may indemnify the party that suffered damages due to such breach. In many cases, the party who breached the warranty or representation will not incur substantial financial loss but may be responsible for paying to remedy the breach. If the breach cannot be remedied, the property transaction may not close. Typically, in these cases, if the seller cannot close the transaction due to a breach, the seller may sue the buyer for damages.  

These legal nuances highlight the importance of ensuring the contractual language contained within your Purchase and Sale Agreement is legally sound, as well as the importance of having a comprehensive property inspection before the closing date.

The Property Lawyers at Getz Collins Provide Comprehensive Real Estate Services to Buyers and Sellers

Getz Collins and Associates‘s experienced real estate lawyers provide clients with personalized and cost-effective legal solutions to address various property-related matters. From our offices in Calgary and Strathmore, our real estate team assists with title searches, lease negotiation, contract review and refinancing. If a dispute arises, our litigation lawyers provide superior representation and protect our clients’ rights until the matter is resolved. We provide exceptional client service to individuals throughout Alberta, including those located in Airdrie, Cochrane, Okotoks, Drumheller, Chestermere, Hussar, and all surrounding areas. To speak with a team member and learn more about how we can assist you, please get in touch with us online or at 587-391-5600.