During this peak home sales season, when thousands of houses and condominiums will be sold, buyers and sellers need to be aware of what is legally included and excluded from their sale.
Most experienced real estate agents have horror stories about “fixtures,” which the seller removed but the buyer thought were included in the sale.
Purchase Bob Bruss reports online.
To illustrate, my mother was a mild-mannered woman. Only once did I ever hear her raise her voice. I was helping mom and dad move into their condominium. As I walked down the hallway to the condo carrying some boxes, I heard her scream as she entered the condo, “Where is the chandelier?”
The seller had removed the dining room chandelier. Even my dad was surprised.
Fortunately, a phone call to the real estate agent resolved the problem, the seller sheepishly restored the chandelier, and everyone lived happily ever after.
That typical example shows how important fixtures can be in a home sale.
THE SIMPLE REAL ESTATE LAW OF FIXTURES. Most home buyers and sellers, and even their real estate agents, often do not understand the simple law of fixtures.
A “fixture” is moveable personal property, which, by means of bolts, nails, screws, cement, glue, or other attachment method, has been converted to real property. Clearly, that dining room chandelier had been converted from personal property to real property because of its permanent attachment to the structure. Nothing was said in the sales contract about its exclusion from the condo sale.
A more troublesome example can be window coverings. Suppose a house or condo has beautiful draperies and attached wood window blinds. Those draperies hang by hooks from a drapery rod that is screwed into the wall.
The law of fixtures says the draperies are personal property because they can be easily removed without damage, but the drapery rods are fixtures included in the home sale. The wood window blinds, if permanently attached to the structure, are considered fixtures, which are included in the home sale.
But the printed sales contract can change the result. Most well-written home sales contract forms specify “window coverings” are included in the sales price (unless otherwise excluded).
REMOVE IT IF YOU DON’T WANT IT INCLUDED IN THE SALE. As longtime real estate agents know, the worst thing a home seller can do is hang a sign on a fixture stating the seller wants to exclude it from the sale.
Having bought many rental houses, I recall seeing little signs hanging from the dining room chandelier, or pasted on the front of the dishwasher, saying, “This item not included.”
That is like waving a red flag in front of a bull. Unless the item is junk, the buyer will then insist on receiving that fixture as part of the home-purchase price.
A better approach for home sellers is to remove the item before exposing the house or condo to prospective buyers. Removing the dining room chandelier and installing a tasteful replacement is far better.
For example, last year I recall inspecting an $18 million estate where the seller had removed the built-in kitchen appliances. Frankly, I thought that was “tacky.” But I was not a serious buyer so I didn’t bring up the issue with the listing agent.
MY FAVORITE FIXTURE STORY. Years ago, in the small town where I live, a large house was listed for sale. One of its primary features was the beautiful rose garden.
After the house sale closed and the buyer obtained title, imagine the buyer’s shock to discover the seller had removed all the beautiful rose plants. That seller obviously understood the law of fixtures.
Plants and trees growing in the ground are considered to be fixtures because they are permanently attached to the land by roots. However, because the rose plants were in large pots, the seller was legally entitled to remove them since they were not permanently attached to the real property.
AVOID FIXTURE TROUBLE WITH A WELL-WRITTEN SALES CONTRACT. When a home buyer spots non-fixture items, such as patio furniture, which the buyer wants included in the home sales price, the buyer must itemize that personal property in the sales contract to have it included in the sales price.
Similarly, if the seller wants to exclude any fixtures that are attached to the structure, those items must be itemized in the written contract otherwise they are automatically included in the sale.
Troublesome items to consider include: track lighting, fireplace inserts and equipment, solar systems, built-in appliances, screens, awnings, shutters, window coverings, attached floor coverings, TV antennas, satellite dishes and related equipment, telephone and Internet wiring, window air conditioners, pool-spa equipment, water softeners, security systems, keys to all locks, garage door openers and remote controls, mailbox, and landscaping equipment.
FIVE LEGAL RULES IF A FIXTURE DISPUTE GOES TO COURT. If a lawsuit develops over an item that the buyer thought was an included fixture, but the seller removed, five basic legal rules generally apply:
1. METHOD OF ATTACHMENT. The most important fixture rule is the method of attachment. If the item is permanently attached to the structure, it is legally considered to be a fixture, which is included in the home’s sales price.
However, if an item can be removed without damage to the structure, such as draperies, it is not a fixture. Examples include unscrewing light bulbs and unplugging a refrigerator because both are personal property not permanently attached to the building.
The item’s weight is immaterial. To illustrate, an aboveground swimming pool is removable personal property unless it is surrounded by a permanent structure, thus making it a real property fixture.
2. INTENT OF THE BUYER AND SELLER. If the written sales contract is indefinite, in a court trial the intent of the buyer and seller become pivotal.
For example, when the multiple listing service (MLS) listing specifies a “beautiful kitchen with the latest appliances,” that implies the seller intends to include those appliances and the buyer can rely on that statement. Or a description of the beautiful swimming pool can be interpreted to mean the seller plans to include the pool cover and equipment.
3. ADAPTABILITY TO PROPERTY USE. When personal property is built into a home, it indicates it has become a fixture, which is included in the sales price.
To illustrate, when I bought my home there were built-in stereo speakers on each side of the den fireplace. Although nothing was said in the sales contract, I would have been very upset if the sellers removed those speakers. However, they did unplug their stereo equipment and I had to buy new stereo components.
4. AGREEMENT OF THE PARTIES. A written contract that lists a specific item, whether it is a fixture or personal property, usually prevails to make it included in the sales price. If in doubt, buyers should list any questionable items.
5. RELATIONSHIP OF THE PARTIES. As a general rule, if a lawsuit develops, courts tend to favor a) buyer over seller, b) tenant over landlord, and c) lender over borrower.
TRADE FIXTURES ARE AN EXCEPTION. The fixture rules explained above apply to residential sales. However, when a commercial business property is sold, the business tenant is entitled to remove business trade fixtures.
Examples include restaurant equipment, outdoor business signs, display cabinets, a bank vault, and a tavern bar. However, the business seller or tenant must restore the premises to its pre-lease or pre-sale condition.
SUMMARY: A well-written sales contract can prevent fixture problems by clarifying what is included or excluded from a real estate sale. For more details, please consult a local real estate attorney.
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