Identifying inclusions and exclusions

Whether or not certain items are included or excluded from the sale of an immovable is a source of many disputes between buyers and sellers. It is therefore important for the broker or agency to identify very clearly, with the seller, what will or will not be included in the sale.

On the one hand, it is sometimes difficult to determine whether an item is movable or immovable. The same item, depending on how it is integrated or attached to the immovable, can sometimes be considered movable, and sometimes not. It should be noted that permanent heating, electrical and lighting fixtures form an integral part of the immovable and are therefore automatically included in the sale by operation of law (except if they are expressly mentioned in the exclusions). Consequently, it is not necessary to identify them in the inclusions.

Also, a seller or a buyer may wish to include certain movable items in the transaction, such as appliances, but exclude an item that is normally considered part of the immovable, for instance a valuable chandelier.

It is also important to consider the items covered under a leasing contract. These items are not owned by the seller, so they cannot be sold and must be excluded from the sale. In such cases, a mention to this effect must be entered under clause 4.5 of the various brokerage contract forms to sell as well as under clause 11.6 of the various promise to purchase forms. If the contract concerning these items allows it, the contract may be taken over by the buyer: see clause 4.6 of the brokerage contract to sell as well as clause 11.7 of the promise to purchase form. The real estate broker must also check whether the leasing contract includes a purchase option clause, as this could be used as a negotiation tool. Failure to make the necessary verifications regarding a leased item and to exclude it from the brokerage contract and the promise to purchase could have unfortunate consequences. The seller could be required to pay for this item since, in the absence of an exclusion, the buyer is well within his rights to consider the leased item part and parcel of the immovable he has purchased.

In order to avoid potential conflicts, it is suggested to specify the brand names of the appliances that are being sold with the immovable and to write a detailed description of the items and accessories that are included or excluded. The broker or agency must also make sure that this information appears on the brokerage contract, the detailed description sheet and the promise to purchase. We cannot overstress the importance of being attentive to these details and taking the time to put the wishes of the parties in writing.

The broker must also, as part of his verification obligations, ask the seller if the goods included in the sale are in good working order and whether they will work normally at the time of delivery of the immovable. The brokerage contract and promise to purchase forms mention that the items included “are sold without legal warranty of quality, at the buyer’s own risk, but must be in working order at the time of delivery of the immovable”.

At the brokerage contract stage, if the seller wishes for the items to be sold with the legal warranty of quality, the broker can cross out that clause, initial it and have the seller initial the deletion. A good practice would also be to indicate that the legal warranty of quality is provided under section 11 (“Other declarations and conditions”) or, if space is insufficient, on the recommended form Annex G – General.

At the promise to purchase stage, if the parties wish for the items to be sold with the legal warranty of quality, it will also be possible to do so. In that case the broker must cross out the clause and have the deletion initialed by the buyer. Before the promise to purchase is accepted, the seller will also have to initial the change prior to signing the form. A good practice would also be to indicate that the legal warranty of quality is provided under section 12 (“Other declarations and conditions”) or, if space is insufficient, on the OACIQ recommended form Annex G – General.

For questions, contact Info OACIQ.