Thursday, December 19, 2013

Why Rental Items Need To Be Clearly Adressed In Real Estate Contracts

Recently Marc Weisleder published a fantastic story about the importance of addressing rental items in a contract.  When selling your home, its easy to assume that parties will follow the "usual" procedure concerning certain items in the home, but a contract without a direct stipulation is one that leaves you vulnerable.

Marc's example is that of a Mr. Gu, who sold his home in Niagara Falls in July of 2012.  Mr. Gu had installed a home alarm system and signed a three-year contract with the company.  When the home was sold, the Alarm System and equipment were listed in the chattels portion of the contract, but had been left out of the rental item paragraph, which listed only the hot water tank.  When Mr. Gu continued to be billed each month, and the buyer refused to take over the existing contract, Gu sued.

The agent that wrote the contract testified that it was their understanding that the buyer would assume any charges related to the alarm system, although it was not stated in the contract.  The buyer testified that she assumed she would be receiving the equipment in question, but that she would call the alarm company to begin service at a time of her choosing.

The judge eventually dismissed the claim, stating that he preferred the buyer's evidence who claimed no knowledge of the existing rental agreement.  Of course had the alarm system been listed in the rental portion of the contract, this would never have become an issue.

With items like hot water tanks, furnaces, air conditioners and alarm systems each having separate and specific rental agreements, any contract must include these items and the details surrounding their existing rental agreement.  Buyers must also be careful to investigate each agreement in detail, as fees for cancellation or imminent elevated monthly costs may change their mind about taking on these contracts.