I had a tough week for closings.

Really tough…

First, I visited a property the day before closing with clients, only to find the house was still full of junk.

A rusted barbecue, broken planters, massive garden sculptures, a musty deep freezer, multiple bookshelves, broken closet organizers, and an oven full of rusted pots and pans – just to name a few items that were left behind, to our surprise.

The listing agent said that all of this was scheduled to be removed that very day, but my clients didn’t believe her.

Everything was removed in the end, but the incident wasn’t without anxiety.

Oh – and on the day of closing, they happened to be walking their dog by the house, and guess what?  The front stairs had collapsed.

They got an abatement, not to worry.  And the house is a “project” for sure.  But was this an enjoyable twenty-four hours before closing?  Nope.

My second experience, which was the very same day, came after a sale had closed; around 1:30pm.  The funds were transferred, title was closed, and the new mortgage was registered.

Suffice it to say, those three things told us that this deal was “done.”

The buyers pulled up at the house around 3:00pm in their moving truck and went to open the lockbox, but they found no key.

They didn’t need one, it seemed.  The front door was wide open.

The buyers walked inside the house, and guess what they found?

One of the sellers.  Still packing…

Tough, tough week for closings!  Not all of them go smoothly, but these two happened on the same day, and it was more than “just one of those days” as the after-effects of these two incidents linger.

I was reflecting on these closings when I happened to read an article in the Toronto Star by the RECO registrar, Joe Richer.  He often writes articles as a “special to the Star” and this one, while seemingly innocuous, was also seemingly coincidental.

Here’s the article in full, and while you’ll likely agree that this isn’t exactly The Sixth Sense level of suspense, let me follow up on it after…

“Garden Plants As Well As Well As Chattels And Fixtures Can Be Included In Your Purchase Offer”
Joe Richer
Toronto Star
May 27th, 2022

Can the owners of the house I’m buying take the garden perennials with them?

With summer right around the corner, many of us are looking forward to enjoying time outdoors, including in our backyards. So, it is understandable that having a well-landscaped garden with mature plants and trees on a property can be very appealing and a strong motivating factor when it comes to buying a home.

It sounds like that is the case for you, as well, and that the perennials are a consideration in your decision to buy the property. The question is: Are they deemed to be part of the purchase?

Typically, in-ground plants are considered part of the home and included in the sale. This is because they are a permanent part of the property and cannot be removed without damaging the landscaping. These would be included in the purchase agreement — much like any indoor fixtures, unless and until they are specified as excluded.

Having said that, I would still like to flag that there are many grey areas when it comes to what’s included in or what’s excluded from any given home sale. Unfortunately, disputes occur between buyers and sellers about the state of a home on the closing date of its sale.

To prevent this from happening to you, my advice would be to do your diligence and take steps to protect your interests. I would suggest that you communicate the importance of the plants and landscaping to your real estate agent, ask questions, and go over your expectations of what you think is part of the home.

Carefully log and document all chattels and fixtures, including any plantings that are to be included with the home, and ask that they be included in the agreement. For specific chattels even beyond garden plants, include names, model numbers or online photos to be clear what each is. It would not be helpful to include general broad statements. Be specific.

That way, your agent can ensure that the purchase agreement specifically includes the state of the garden and its contents, as well as clearly documenting all the other fixtures and chattels to be present once the sale closes.

You and your agent can also discuss ways for you to visit your new home just before closing day. This will give you an opportunity to inspect the backyard and perennials and confirm they are in the same condition as when you made the offer. This is a common practice in real estate transactions and can be addressed during negotiations. However, depending on when your closing date is, and knowing the limited growing season we have in Ontario, this may not always be a plausible option.

If you and your agent take all these steps, you should have peace of mind that the seller and you are on the same page, the perennials will be still there on closing day, and you will have them to enjoy for the years to come. All the best.

If you have a question about the home buying or selling process, please email information@reco.on.ca.

See what I mean?

The article is elementary, at best.  But it also starts with a stupid question about plants in order to segue into a conversation about the definition of chattels and fixtures.

Joe could have used a simpler and easier-to-remember phrase to describe fixtures:

Anything nailed, screwed, or glued!

It rhymes and it’s catchy.  It’ll do.

A fixture is anything affixed.

A fridge isn’t a fixture because it’s moveable.  But then, a 5,000-pound garden gnome on the front lawn isn’t affixed but it’s also not moveable, so my definition is thrown right out the window.

This is why, as Joe notes, it’s best to itemize anything that can be considered either a “fixture” or a “chattel” by two different people.

Simply put: chattels need to be “included” on the offer and fixtures need to be “excluded.”

This is because all chattels are deemed to be excluded unless included, and all fixtures are deemed to be included unless excluded.

I often see in the “inclusion” section of the MLS listing: air conditioner.

This isn’t a chattel.  It’s a fixture.  Why in the world somebody put this in the inclusions?

But how about a 100-foot length of string-lights that are wrapped around the rafters of a garage and would take somebody two hours to un-string?  Are those included?  Well, they’re not affixed so technically, they’re a chattel.  But show me a buyer out there who thinks that a seller would climb up into the rafters and un-string those on a Saturday afternoon in the dead of winter, and I’ll show you a buyer who lost $600 worth of inclusions upon closing.

True story.

I have dozens of chattels-and-fixtures stories, but this article got me thinking about a few different topics:

1) Buying furniture with 20% down!

They say, “As soon as you drive a new car off the lot, it’s already worth ten percent less than what you paid for it.”

I don’t know anything about cars, but I’m sure this is true.

The same is said of furniture.

I can’t tell you how many sellers ask me to sell their furniture, only for me to find out that they want $800 for their 8-year-old dining table that originally cost $1,000.

Your custom, $12,000 couch that you bought four years ago is “worth” about $3,000 today.  Nobody wants your used furniture.

Then again, everybody wants your used furniture!

With the cost of real estate where it is, a smart buyer will take advantage of a seller who’s looking to part with some wares.  Living room and dining room furniture are always atop the list, with couches, chairs, dining table/chairs representing items that everybody uses but nobody wants to pay full price for.

And when you think about, the really, really smart move is to amortize this cost over twenty-five years.

Wait, what?  Are we buying at Honest Ed’s and paying on layaway?

No.

But if we pay $1,000,000 for a house, or pay $1,005,000 for that same house and include $5,000 in furniture (hopefully costing $20,000 new), then we can make a 20% down payment on the entire $1,005,000 and thus really only “pay” $1,000 for that furniture.

Because the alternative is to buy the house for $1,000,000 and then write the seller a cheque for $5,000.

Why do that?  Why not include the furniture in the purchase price and add it to the mortgage?

–

2) Don’t get overzealous with inclusions.

Having said the preceding, I did see a case once where this blew up in the buyer’s face.

I had a client who bought a $2,500,000 penthouse, years ago, when that was a lot of money.

He was in a profession that not only required a lot of his time and therefore made it impossible for him to furnish the property, but his profession also gave him the big-dog, hot-shot attitude that made a person say, “I want everything in this place.”

We sat down with the sellers, who had impeccable taste, and listed off all the items in the condo.

I’m not the most sophisticated individual in the city, so forgive me for not knowing what a $4,000 dining room chair looks like.  Oh, and in this case, there were eight of them, in addition to the table, valued at $70,000, designed by Jean Claude Van Smoochiemonster.

By the time we were finished, there was about $400,000 worth of inclusions.

Forget what I said above about the depreciation on furniture, just for a moment.  We’re talking imported Italian wares, not EQ3.

My client bought everything in the condo, save for their clothing, although that wasn’t for lack of effort on his part.

In the end, we settled on $300,000 and made the purchase price $2,800,000.

Easy-peasy, right?

Except that, two weeks later, my client’s mortgage broker called and said, “The bank rejected this Agreement of Purchase & Sale.”

Why?

Because an underwriter looked at a massive Schedule B of inclusions and thought, “TD isn’t going to finance this asshole’s $6,000 leather ottoman.”

Fridge, stove, dishwasher, microwave, washer, dryer; all okay, 100 times out of 100.  But $300,000 worth of luxury goods?  No dice!

My client wasn’t exactly poor, so he agreed to pay the sellers $300,000 for the items in a side-deal, and we amended the purchase price from $2,800,000 to $2,500,000.

But let this be a lesson to you: don’t get overzealous with inclusions.

–

3) Have you ever experienced a bait-and-switch?

No.  Not yet.  But there’s still time…

Joe says above in his article:  “For specific chattels even beyond garden plants, include names, model numbers or online photos to be clear what each is. It would not be helpful to include general broad statements.  Be specific.”

I’m not going to lie: I have never seen an offer with an inclusion that says: Existing Stainless Steel Refridgerator (Jenn-Air Model #89105404, Serial #ABC284093.

Never seen it.  Never will.

Is Joe smarter than the rest of us?  I mean, I think we could have come up with that idea, but it’s not necessary.  I’ve never seen a bait-and-switch nor have I ever heard this from a colleague, but I’m sure that it’s happened somewhere.

Legally-speaking, if you’re inclusion reads “Fridge” rather than “Existing Fridge,” then perhaps there’s an argument to be made by the buyer that he or she merely owes the seller a fridge; any fridge.

But in practice, that’s ridiculous.

If you’re buying from a “flipper,” then maybe have a heightened sense of awareness.

–

4) What about “equal or greater value” for replacements?

Sometimes in a listing, you’ll see the dining room fixture is excluded and the broker’s remarks reads, “Seller To Replace Dining Room Fixture With Item Of Equal Or Greater Value.”

Sounds great, in theory.

But how do you value that chandalier?  It’s apparently so valuable, perhaps sentimentally, that the seller wants to take it with.  So where does the value come from?

It’s completely subjective.

And more to the point, the seller is simply going to head over to Union Lighting, pick something that he or she feels is “similar,” and have that item installed at the home.

The seller is never going to tell the buyer, “I paid $5,500 for that chandalier back in 2009, so with inflation, and the fact that this item is discontinued and was part of a limited edition by a well-known designer, I value it at $9,000 today,” and then go buy a chandalier that’s listed for $9,200 at Union Lighting.

No way.

In practice, the seller buys a fixture and has it installed, and the buyer assumes it’s on the up-and-up.

If the buyer really wants to ensure he or she is getting a fair deal, then a value must be set on this item during the negotiations.  Once that deal is signed, the buyer loses control of this.

–

5) Who’s looking after the property?

You’ve heard this story from me before, but here goes…

I sold a house a decade ago where the sellers, upon signing the APS, moved out of the house and across the country.  Before they left, they turned off the heat.

Then came winter.

Then the pipes froze.

Then the pipes burst.

Then the house flooded.

Bottom line: the property has to be handed to the buyers in the same condition as it was sold in.  A seller needs to keep the house or condo in good shape; great shape, to ensure there are no issues before closing.

If the dishwasher breaks between the sale and the closing date, the seller has to fix it or buy a new one.

Same goes for everything in the house.  Chattels, fixtures, systems, features, and finishes.

–

6) Who’s deadheading the begonias?

The seller has to look after the property, make sure the pipes don’t burst, keep the appliances working, and fix a broken window if the neighbourhood kid throws a baseball through it.

But to pick up on Joe’s point above: what about a property with exceptional landscaping where there are not only valuable trees, shrubs, and flowers being included with the sale, but where the property is kept in immaculate shape?

If you buy a property in the month of June when the lawn is freshly mowed and trim to the front curb, the trees are pruned, the flowers are tidy, and it’s clear that landscapers have been there twice per week, then you should expect to receive the property in the same condition.

Joe notes above that we do have a particular growing season in Ontario, so looking for fully-bloomed flowers when you close in October isn’t realistic.  But if you buy in June and sell in July, and note that in July, there’s been zero maintenance on the grounds, you’d have a claim against the seller.

Joe notes that perennial flowers are deemed to be “fixtures” and included in the sale, unless specifically excluded, and 99% of offers will contain a clause in Schedule A stipulating, “Chattels and fixtures must be in good working order,” and while that’s really meant to describe a fridge or a stove, it can be applied to the plants and trees as well.

Rationally-speaking, any seller who keeps his or her property in good shape, and sells the property as such, would be a fool to cut costs and stop landscaping between the time the deal is signed and the day of closing.  But then again, I had a client turn off the goddam water once in the dead of winter, so anything’s possible…

–

Have a great weekend, everybody!