LawAnswers.com.au - Australia's #1 Legal Community

LawAnswers.com.au is a community of 10,000+ Australians, just like you, helping each other.
Ask a question, respond to a question and better understand the law today!
Join us, it only takes a minute:

WA Property Contract - Good Working Order Settlement Clause Dispute

Discussion in 'Property Law Forum' started by Huckle, 27 August 2014.

  1. Huckle

    Huckle Member

    Joined:
    27 August 2014
    Messages:
    2
    Likes Received:
    0
    My wife and I placed an offer on a property subject to the electrical fixtures all being in good working order with the proviso that if they weren't, then the amount to repair the deficit would be deducted from the property settlement amount.

    At the time of the final inspection a number of items were identified but because of problems with the vendor getting an electrician in time. Most but not all were able to be rectified prior to settlement. To allow settlement to proceed, a sum of $2000 was retained in trust to cover the final expenses.

    The point of contention relates to two light fixtures on the front wall. These appeared to be functional, were not disclosed as non-functional on the signed sale contract and were not disputed on the initial list of work to be done.

    The vendor is now saying that they were never physically wired back to the house and that they shouldn't be required to make them operational. The money remains in trust until an agreement takes place but this seems unlikely at this time.

    I don't really see the point in retaining expert property law or contract law lawyers over such an amount, but what I'm wondering is whether this is something I can pursue as a small claim in the Magistrate's court? I've read their information sheets but it's a bit unclear about whether this fits the description for debt or damages or whether as a contract dispute it would require lawyers and a more formal proceeding. Is anyone able to clarify this for me?

    Thanks.
     
  2. Amanda E

    Amanda E Well-Known Member

    Joined:
    9 April 2014
    Messages:
    154
    Likes Received:
    20
    Hi Huckle,
    Do you have a Dispute Resolution clause in the contract that sets out the dispute resolution procedure?
    If so, have you followed that procedure? Have you also stated the issue in writing to them providing the text of the clause in the contract that requires them to have the electrical fixtures in good working order?
    WA Legal Aid has a 'Negotiation' page that you might find useful. If you can't negotiate it, then I think you'd need to get legal advice as you might find they use lawyers against you.
     
  3. Sarah J

    Sarah J Well-Known Member

    Joined:
    16 July 2014
    Messages:
    1,314
    Likes Received:
    243
    Hi Huckle,

    What are the terms of the trust? As in, what criteria must be satisfied in order to be reimbursed/paid from the money in the trust? Does the trust over cover costs for repairs that are disclosed as "non-functional" in the contract?

    Was the agreement subject to all electrical fixtures to be in good working condition? Is there a definition included in the agreement as to what "good working condition" is and what "electrical fixtures" include?

    I agree with Amanda, that you should try internal/informal dispute resolution procedures first. If this fails, you have an option of paying for the installation yourself and then claiming damages for repairs/costs from the trust by making an application to the Small Claims Court. Even if you cannot be reimbursed from the trust on grounds that the trust is only for repairs disclosed as "non-functional", you should be able to claim under the original condition in the sale agreement that "all electrical fixtures are to be in good working condition". If there is a provision for reimbursement if any fixtures are not in good working condition, then you may seek under this. If there isn't, you may pursue an action for breach of contract.
     
  4. Huckle

    Huckle Member

    Joined:
    27 August 2014
    Messages:
    2
    Likes Received:
    0
    Thank you for the replies.

    To elaborate on the details, the sale contract clause reads;

    "The seller warrants that all electrical, gas, plumbing fixtures and fittings shall be in fair working order at settlement. In the event that any repairs are required to satisfy this condition, the seller authorises the cost of these repairs to be deducted from settlement proceeds."

    The final inspection occurred 1 week prior to settlement, the vendor wasn't happy for the week prior, and a representative from the real estate company came along. She took notes as she went and at the end, compiled a list of problems which was emailed to us and both settlement agents. The final item in that email were the light fixtures on either side of the front gate. They looked like a nice touch and would make the house easier for visitors to find at night, they looked weathered but had wires visible in the back of them and appeared like they should have been working. Our settlement agent subsequently sent the estate agent an email asking for confirmation that the vendor would attend to the list prior to settlement and we both received confirmation that they would.

    A settlement date was booked - the vendor used their 3 day discretionary delay because she hadn't read the contract properly and hadn't realised she'd agreed to a 3 week settlement and consequently hadn't moved.

    Just prior to settlement, most but not all of the required repairs had been undertaken. The two settlement agents negotiated to withhold $2,000 from the vendor sale proceeds for the purpose of completion of the electric works detailed in the previous email. At this time it was stipulated that if it took longer than two weeks from settlement, the money should be credited to us for us to arrange the repairs ourselves. The vendors settlement agent spoke to the vendor who agreed to withhold the money so settlement proceeded.

    The light fixtures remain disconnected and non-functional, the vendor is now asking for the money to be released and that although she signed a contract with no exclusions listed, states that she disclosed the state of the lights to the real estate agent and feels that this is not her problem.

    The last part is for the vendor to take up with their real estate agent and isn't for me to get involved with. Unfortunately the vendor has been difficult through most of the steps of the process and doesn't seem to want to take any responsibility for the sale contract that they signed. I still maintain that I don't want to get lawyers involved for such a sum of money however if this is something I can pursue as a small claim, in which lawyers are barred without mutual agreement, then I'm quite happy to lodge a claim and write up the required document to go with it. At least we'll get a decision and some closure and hopefully some functioning light fittings. The only thing I wasn't sure about was whether small claims court here in WA covers this kind of issue? The information sheet wasn't too informative on the scope of what comprises a small claim.
     
  5. Sarah J

    Sarah J Well-Known Member

    Joined:
    16 July 2014
    Messages:
    1,314
    Likes Received:
    243
    Hi Huckle,

    From a plain reading of the provision, it appears that you do have grounds since it warrants all electrical fixtures and fittings. However, it may be implied that this only meant "all essential or necessary" electrical fixtures and fittings. Do you have anything, such as negotiation emails or correspondences, that point to the former meaning and not the latter? Perhaps you placed emphasis on having all fixtures and fittings working upon settlement/possession?

    Although the vendor claims that the disconnected lights were disclosed to their estate agent, were they ever disclosed to you? Were you ever aware of them before now?
     

Share This Page

Loading...