by Andrew Roberston, Trainee Solicitor
A potentially contentious and often misunderstood issue in any house purchase or sale is the position with regard to the central heating system and other systems (water, drainage, gas and electric) or appliances, and their state of repair before and after the date of entry.
Provision for the condition of these is contained within Condition 4 of the Scottish Standard Clauses (Edition 3) which is incorporated into almost all of the missives or contracts to buy and sell residential property in Scotland.
The test for these items is ‘working order’, meaning that if the system or appliance works on the date of settlement, ie it simply switches on, then that is sufficient. This is an extremely low standard given that the system or appliance need not even comply with any current installation regulations.
Indeed, the working order requirement does not include any element of upgrade that may, or may not, have occurred, and is commensurate with the age of the item. The seller has no obligation to carry out any works to the systems or appliances except those necessary to put them back into working order. The Standard Clauses do, however, require the seller to confirm that they received neither notice nor intimation that the system is in an unsafe or dangerous condition (eg following a gas maintenance inspection).
It is also important to note that under the Standard Clauses, any defects existing at the date of entry must be intimated to the seller within five working days of the date of settlement. If not, any potential claim is lost.
Practically, however, once the price is paid and the keys handed are over, there is no real incentive for the seller to inspect or even comment on any intimated defect after the date of settlement as they will, in many cases, be focusing on a new property with their own system checks to carry out.
The missives, therefore, provide that in the event that the seller does not inspect defects (or that defects are inspected but not rectified) within five working days of intimation, or otherwise in the case of emergency, the purchaser may press ahead and have any necessary repairs carried out at the seller’s expense.
In the majority of cases, the purchaser will move in and the central heating system and appliances will be in working order and both parties can move on with the enjoyment of their respective properties.
In other cases, a claim may have to be raised and the missives relied upon.
At this point we should note that any claim arising out of the missives must be greater than £400. While in theory, if a valid claim is raised by the purchaser, the seller would simply meet the costs claimed, sometimes this is not the case.
In that event, the ultimate recourse for the purchaser is to raise court proceedings, which can be time-consuming and expensive (if raised by their solicitors). Costs can be minimised through the use of the Simple Procedure rules (if the claim is less than £5,000) where proceedings can be raised by the purchaser themselves, if so inclined.
Striking a balance?
The position can, however, differ in the case of a sale by executors, trustees, or landlords. Generally, a solicitor acting on behalf of those parties will attempt to limit their warranties as much as possible considering that the seller may not have had direct involvement with the property. It is perhaps, therefore, unfair for such sellers to bear the responsibility for the systems or appliances and so it may be that the purchaser of such a property finds themselves taking on the liability at the date of entry with no recourse to the seller.
On the other hand, it could also be argued that if the property is being marketed with the benefit of a central heating system, then the purchase price offered is based on including the benefit of that system and, by implication, for it to be in working order. Indeed, that would be the basis of negotiation between the seller’s and the purchaser’s solicitors. Thus, while the position is not ideal for the purchaser, the Standard Clauses strive to strike a fair balance on both sides of the contract.
Without such compromise on each side, negotiations would likely become protracted and frustrating for all involved and, invariably, missives cannot cover every eventuality. Solicitors can only appeal to sellers to ensure the systems and appliances that are included in the price are in working order and to purchasers to ensure that any claim made after the entry date is genuine and fair. Ultimately, purchasers must remember that they are buying a second-hand property with, at least, second-hand systems and appliances.