A young couple was expecting to receive the proceeds of their property sale in a few days, which would be just enough to clear their debt to the bank.

A few days before settlement, their lawyer contacted them as the purchaser had raised that there was a Personal Property Securities Register charge over the carpet in the house which they purchased a year prior with one of their Q Cards and there was still $4,000 to be paid to clear the debt.

The couple’s lawyer advised that this had to be paid off as part of the settlement process otherwise Q Card would not remove the charge they had over the carpet in the property.  This would mean they were not be able to fulfil their obligations under the Agreement for Sale and Purchase as it would be in breach of a warranty included in that Agreement.

They therefore had to scramble to find extra funds to pay off the debt on settlement.

When you purchase items using hire purchase types of arrangement, the finance company will usually require that they create a PPSR (Personal Property Security Register) charge over what you have purchased.  Essentially if you fail on your payment they can repossess what you purchased using the funds you borrowed.

Other ways you can be caught under this warranty in the Agreement for Sale and Purchase as a vendor are:

  • If you have received a loan from the local Council to pay for insulation in the property;
  • If you are hiring solar panels; or
  • Someone else owns some of the chattels listed for sale in the Agreement for Sale and Purchase.

There is nothing wrong with purchasing items this way, but if you have agreed to sell that item with the property then, unless you have added a special clause to the agreement, that item is included as part of the sale for no additional cost and free of charge, to ensure that the item becomes the purchaser’s owns unencumbered property.

When you are selling a property you should check who you still owe funds to for anything that you plan to sell with the property and check that you do indeed actually own what you are trying to sell.  Your lawyer can assist with searching the PPSR and advising you on your obligations under the Agreement for Sale and Purchase.