When it comes to disputes arising between buyers and sellers during the settlement process, it can often be a case of looking for “the usual suspects” for a probable cause. In particular, we find that the “Good Working Order Clause”, if not handled correctly, attracts its fair share of contention between parties.

This was clearly illustrated in a recent case where the “working condition” of a 30+ year old air-conditioner became the focal point for a dispute between a buyer and seller and threatened to disrupt an otherwise trouble free settlement process.

In this instance, our client, Mr Barker, (not his real name) was selling an older style Hills property. Installed within the house was a 30+ year old air conditioner, which the seller said still worked.

All was progressing smoothly until the final inspection when the buyers tested the air conditioner. They found that even though the air conditioner worked, it rattled when operating and the oscillation flap did not move fully on the unit.

The buyers objected, stating that the air conditioner was not in “good working order” and insisted that the unit be fixed. However, the seller felt that considering the age of the unit it would be unlikely to get it back to what the buyers considered to be “good working order.”

Unfortunately the buyers took the opportunity to push for a whole new air conditioning unit to be installed.

The seller refused to cover the expense of a brand new unit, reasoning that he had sold his house with the original 30+ year old appliance installed and he questioned why he should have to replace the existing unit.

Ultimately both parties came to an agreement and settled the dispute with the seller deducting a small amount off the purchase price of the property to cover some repairs and maintenance to the air conditioner.

This situation may have been averted if the following points were followed:

1. The agent needed to ensure that the seller was aware of his obligations regarding the “good working order clause” and needed to check with the seller if there were any issues with appliances which could have caused problems.

2. If so, the seller could then either stipulate that any problem appliances were offered on an “as is” basis or arrange to have them fixed prior to the settlement.

3. Conversely the seller needed to be up front regarding any issues with appliances and disclose any items not in “good working order.”

Image by Luigi Caterino via Flickr.

About the Author

Residential Settlements

We provide real estate settlement services throughout Western Australia. In addition, we complete Related Party Transfers, Family Transfers, Private Sales and other title related services.