BEST OF THE HOTLINE: Whose wood pile is it?

The day before settlement, newlyweds, Donna and Jim, arrived at their soon-to-be new home for a pre-settlement walk-through. As they approached the home, Sam the seller was pulling out of the driveway in a large pick-up truck carrying the oak firewood that previously had been neatly stacked under an elevated deck. Jim and Donna were somewhat startled and a more than a little peeved. They were excited about having a home with a fireplace and each had counted on celebrating their purchase by a cozy fire the following day.

Jim and Donna were even more startled, and peeved to the point of furious, when a half hour later a fuel oil truck appeared at the home and the operator began siphoning away what was over a half-tank of heating fuel! Need I tell you that the greeting at the settlement table was as icy cold as a December night in an unheated home sans any prospect of a hearth-side romantic interlude?

So whose wood and fuel is it and what is the justification for your answer? Assuming that the Standard PAR Agreement (ASR) was used, we turn to Paragraph 7, Fixtures and Personal Property. It makes clear that included in the sale of real estate are the permanently installed items and among other things, "any remaining heating and cooking fuels stored on the Property at the time of settlement." (Emphasis added.) Guess what Jim and Donna? No wood and no oil. Not there at the time of settlement.

HotLine callers have occasionally found an argument against the removal in Paragraph 17, Maintenance and Risk of Loss. It says that, "Seller will maintain the Property, grounds fixtures and personal property specifically listed in this Agreement in its present condition, normal wear and tear accepted." It is argued that the qualification "reasonable wear and tear" as applied to remaining heating/cooking fuel means that the seller can only diminish the stockpile by ordinary and reasonable usage. To this I say, good try, but no way.

Heating and cooking fuel are not fixtures in that they are not placed with the property with the intent that it be there permanently. Fuel is a consumable that is purchased (or gathered), used, and purchased again. If it is permanently, then the only way that it is maintained with the property is if it is "specifically listed in this Agreement." Where is the personal property listed? In Paragraph 7 and, in this case, the only heating and cooking fuels that are sold with the property are those that are found on the property at the time of settlement.

So when your buyers call you within those first cold days after settlement complaining how shocked and upset they were to find that the seller had left but vapors in the oil tank, what are you to say? Do you agree with their being startled and act as though you, like Jim and Donna, were taken by surprise? Do you 'fess-up' to not knowing your agreement of sale and how it is interpreted? Do you buy them a tank of fuel? I am sure all have been tried with varying degrees of success.

Had Jim and Donna been forewarned of the possibility of losing the woodpile and remaining fuel oil, they may have drafted their offer differently. Paragraph 7 includes some blank lines on which one could write something to the affect that from the execution of the agreement to settlement, seller will only use such heating and cooking fuels as in similar quantities as had been consumed by seller previous to the execution of the agreement. I dare say many of you could write a much better provision and you are certainly invited to so.

The agreement reflects a meeting of the minds between the parties. It is negotiable. In order to negotiate a satisfactory agreement, standard boiler-plate provisions have to be understood and explained.

Here is to a warm winter.

Copyright © James L. Goldsmith, Esquire, CALDWELL & KEARNS, P.C., 2012

All Rights Reserved

Jim Goldsmith is an attorney with Caldwell & Kearns and serves as general counsel to PAR. A substantial portion of his practice is dedicated to providing advice and counsel to real estate licensees. He and his firm represent and defend real estate salespersons and brokers in civil lawsuits and licensing claims across the Commonwealth. Jim also defends REALTORS® in disciplinary hearings conducted by the Real Estate Commission. He routinely counsels employers on employee relations issues and is one of the voices of the PAR Legal Hotline. He may be reached at www.realcompliance.com.