Identifying inclusions and exclusions
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Please note that the following article has not yet been updated since the coming into force of the new Real Estate Brokerage Act on May 1, 2010. The OACIQ positions which are conveyed in this article may have evolved since the date of its publication. It is your responsibility to ensure, at all times, that you are acting or that you are exercising your rights or recourse in accordance with the Real Estate Brokerage Act, its regulations or any other applicable law.
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Often in real estate transactions, inclusions and exclusions are not clearly identified, which leads to conflict.
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. Moreover, a seller or a buyer may wish to include certain movable items in the sale, 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 such as the water heater or the alarm system. Since these do not belong to the seller, they must be excluded from the sale and this must be stated in the promise to purchase. Evidently, the seller cannot sell something that he does not own. The agent 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 would 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. Inclusions and exclusions in a brokerage transaction are a common source of dispute between sellers and buyers. Water heaters, heating systems, telephone systems, alarm systems and pool accessories are the most common culprits. It is crucial for the real estate broker or agent to define explicitly with the seller what will be included in or excluded from the sale.
It is suggested to specify the brand names of appliances that are being sold with the immovable and to write a detailed description of items and accessories that are included and excluded in order to avoid potential conflicts regarding ownership. The broker or agent 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 confirm the wishes of the parties in writing.