January 8th - 2016

Legal Beat: Alarm system leads to alarming lawsuit

The seller installed an alarm system in his home before putting it on the market. After the property sold, a dispute arose over the payment of monthly fees for the alarm monitoring service.

Legal Beat

The seller installed an alarm system in his home before putting it on the market. After the property sold, a dispute arose over the payment of monthly fees for the alarm monitoring service.

Legal Beat

by Merv Burgard, Q.C

It all began when a home owner arranged for an alarm system to be installed in his residence. The cost of installing the system was more than $700 and the package featured a keypad entry and basic alarm system. The owner also signed up for a monitoring service, which included a monthly charge of $45.14. A modem was installed that would trigger the monitoring device.

Some 18 months later, the same owner decided to sell his home. The agreement of purchase and sale (APS) stated: “Chattels included … Alarm system and equipment.” However, the only item listed in the Rented Equipment category was as follows: “Hot water tank with the buyer to assume the rental contract.”

In the course of the property sale, a lawsuit ensued. The buyer and seller disagreed on whether the buyer was required to assume the monthly charges for the alarm system. The seller claimed that the buyer was to have taken over the cost of the alarm modem and monitoring system.

The judge in this case ruled that the APS was a “botched” agreement. It was not made clear to the court why the seller did not have the modem and alarm monitoring system removed from his prior residence and transferred to his new residence, to minimize costs. The seller stated that he did not know where the modem had been physically located. The judge ruled that the seller was responsible for the monthly charges. The seller’s claim against the buyer was dismissed.  

Gu v Carnovale 2013 CanLII 60220

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MERV’S COMMENTS

Mervin Burgard Q.C.

REALTORS® and lawyers should advise sellers to include a simple clause in the APS such as this one from OREA. This clause will help to prevent any confusion and unnecessary litigation.

The following equipment is rented and not included in the Purchase Price.

The Buyer agrees to assume the rental contract(s) if assumable:

(item) ....................having a payment of $.....................(monthly, quarterly, etc.)

As the OREApedia topic on Fixtures and Chattels notes:

There are a number of possible OREA standard chattels/equipment/fixtures clauses (CHATT-1 to CHATT-7) that can be included in the agreement of purchase and sale. These should be reviewed with buyers for possible inclusion and carefully explained to sellers if they are included in an offer.

Two recently introduced standard clauses are CHATT – 1, in which the seller agrees to convey all fixtures and chattels included in the purchase price free from all liens, encumbrances and claims, and CHATT – 8, which is designed to provide rental payment information for rental equipment that is being assumed by the buyer. 

Mervin Burgard, Q.C.

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