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PURCHASING FURNITURE FROM A SELLER

We often help clients that have found a property to purchase and through discussion with the seller they have also agreed to purchase some furniture items in the home.

Whilst this situation may seem simple, there are some key points to keep in mind for conveyancing purposes when negotiating the inclusion of furniture as part of a property transaction.

We have outlined below the three most common situations in which this occurs and our recommended approach to deal with purchasing the furniture (or other chattels):

1. AGREEMENT IS REACHED PRIOR TO SIGNING THE CONTRACT

If agreement is reached prior to signing the contract, we recommend the furniture is listed in the contract as “Included Chattels”.  This will ensure the items must remain at the property following settlement.  We recommend listing the specific item e.g. x model fridge, to make sure it is not swapped out ahead of settlement for a cheaper product.

The purchase price listed on the contract should reflect any additional amount you have negotiated with the seller for the furniture.

The Transfer (the document we lodge with the Titles Office to record your new ownership) will reflect the purchase price listed on the contract and transfer duty will be calculated on this purchase price (save for special circumstances e.g. purchasing off family).

2. AGREEMENT IS ONLY REACHED AFTER THE CONTRACT IS SIGNED

If you reach agreement to purchase furniture from the seller after the contract has been signed, you can notify your conveyancing solicitor of this agreement.  They can then arrange for the contract to be amended to list the furniture as Included Chattels.

However, once they are aware of the agreement, your conveyancer should amend the Transfer to reflect the consideration you will be paying for the furniture.  Depending on the stage of the transaction, this may have implications for your lender so you should discuss this with your broker/banker before proceeding down this path. 

You will also need to pay transfer duty on the combined purchase price for the property and the furniture.

As such, it may be preferable in some circumstances to organise the purchase of furniture directly with the seller to prevent these complications.

3. PURCHASING VIA A SUPER FUND

Super funds are allowed to borrow money to purchase an investment property provided they adhere to very strict requirements.  Under section 67A of the SIS Act, a super fund is permitted to acquire a ‘single acquirable asset’.  This includes a unit or house.  However, if Included Chattels are listed on the contract, it will no longer be considered a single acquirable asset as there is both a building and furniture.

As such, if you are purchasing via a super fund and obtaining a loan, you should ensure that no Included Chattels are listed on the contract.

IF YOU HAVE ANY QUERIES IN RELATION TO THE PURCHASE OF FURNITURE AS PART OF A CONVEYANCING TRANSACTION, PLEASE DON’T HESITATE TO REACH OUT TO THE MAP LAWYERS’ TEAM.
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