How to avoid home-sale trouble with fixtures

During this peak home sales season, when thousands of housesand condominiums will be sold, buyers and sellers need to be aware of what islegally included and excluded from their sale.

Most experienced real estate agents have horror storiesabout “fixtures,” which the seller removed but the buyer thought wereincluded in the sale.

Purchase Bob Bruss reports online.

To illustrate, my mother was a mild-mannered woman. Onlyonce did I ever hear her raise her voice. I was helping mom and dad move intotheir condominium. As I walked down the hallway to the condo carrying someboxes, I heard her scream as she entered the condo, “Where is thechandelier?”

The seller had removed the dining room chandelier. Even mydad was surprised.

Fortunately, a phone call to the real estate agent resolvedthe problem, the seller sheepishly restored the chandelier, and everyone livedhappily ever after.

That typical example shows how important fixtures can be ina home sale.

THE SIMPLE REAL ESTATE LAW OF FIXTURES. Mosthome buyers and sellers, and even their real estate agents, often do notunderstand the simple law of fixtures.

A “fixture” is moveable personal property, which,by means of bolts, nails, screws, cement, glue, or other attachment method, hasbeen converted to real property. Clearly, that dining room chandelier had beenconverted from personal property to real property because of its permanentattachment to the structure. Nothing was said in the sales contract about itsexclusion from the condo sale.

A more troublesome example can be window coverings. Supposea house or condo has beautiful draperies and attached wood window blinds. Thosedraperies hang by hooks from a drapery rod that is screwed into the wall.

The law of fixtures says the draperies are personal propertybecause they can be easily removed without damage, but the drapery rods arefixtures included in the home sale. The wood window blinds, if permanently attachedto the structure, are considered fixtures, which are included in the home sale.

But the printed sales contract can change the result. Mostwell-written home sales contract forms specify “window coverings” areincluded in the sales price (unless otherwise excluded).

REMOVE IT IF YOU DON’T WANT IT INCLUDED IN THE SALE. As longtimereal estate agents know, the worst thing a home seller can do is hang a sign ona fixture stating the seller wants to exclude it from the sale.

Having bought many rental houses, I recall seeing littlesigns hanging from the dining room chandelier, or pasted on the front of thedishwasher, saying, “This item not included.”

That is like waving a red flag in front of a bull. Unlessthe item is junk, the buyer will then insist on receiving that fixture as partof the home-purchase price.

A better approach for home sellers is to remove the itembefore exposing the house or condo to prospective buyers. Removing the diningroom chandelier and installing a tasteful replacement is far better.

For example, last year I recall inspecting an $18 million estatewhere the seller had removed the built-in kitchen appliances. Frankly, Ithought that was “tacky.” But I was not a serious buyer so I didn’tbring up the issue with the listing agent.

MY FAVORITE FIXTURE STORY. Years ago, in the smalltown where I live, a large house was listed for sale. One of its primaryfeatures was the beautiful rose garden.

After the house sale closed and the buyer obtained title,image the buyer’s shock to discover the seller had removed all the beautifulrose plants. That seller obviously understood the law of fixtures.

Plants and trees growing in the ground are considered to befixtures because they are permanently attached to the land by roots. However,because the rose plants were in large pots, the seller was legally entitled toremove them since they were not permanently attached to the real property.

AVOID FIXTURE TROUBLE WITH A WELL-WRITTEN SALES CONTRACT. When ahome buyer spots non-fixture items, such as patio furniture, which the buyerwants included in the home sales price, the buyer must itemize that personalproperty in the sales contract to have it included in the sales price.

Similarly, if the seller wants to exclude any fixtures thatare attached to the structure, those items must be itemized in the writtencontract 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, windowair conditioners, pool-spa equipment, water softeners, security systems, keysto all locks, garage door openers and remote controls, mailbox, and landscapingequipment.

FIVE LEGAL RULES IF A FIXTURE DISPUTE GOES TO COURT. If alawsuit 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 importantfixture rule is the method of attachment. If the item is permanently attachedto the structure, it is legally considered to be a fixture, which is includedin the home’s sales price.

However, if an item can be removed without damage to thestructure, such as draperies, it is not a fixture. Examples include unscrewinglight bulbs and unplugging a refrigerator because both are personal propertynot permanently attached to the building.

The item’s weight is immaterial. To illustrate, anaboveground swimming pool is removable personal property unless it issurrounded by a permanent structure, thus making it a real property fixture.

2. INTENT OF THE BUYER AND SELLER. If thewritten sales contract is indefinite, in a court trial the intent of the buyerand seller become pivotal.

For example, when the multiple listing service (MLS) listingspecifies a “beautiful kitchen with the latest appliances,” thatimplies the seller intends to include those appliances and the buyer can relyon that statement. Or a description of the beautiful swimming pool can beinterpreted to mean the seller plans to include the pool cover and equipment.

3. ADAPTABILITY TO PROPERTY USE. Whenpersonal 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-instereo speakers on each side of the den fireplace. Although nothing was said inthe sales contract, I would have been very upset if the sellers removed thosespeakers. However, they did unplug their stereo equipment and I had to buy newstereo components.

4. AGREEMENT OF THE PARTIES. Awritten contract that lists a specific item, whether it is a fixture orpersonal property, usually prevails to make it included in the sales price. Ifin doubt, buyers should list any questionable items.

5. RELATIONSHIP OF THE PARTIES. As ageneral 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. Thefixture rules explained above apply to residential sales. However, when acommercial business property is sold, the business tenant is entitled to removebusiness trade fixtures.

Examples include restaurant equipment, outdoor businesssigns, display cabinets, a bank vault, and a tavern bar. However, the businessseller or tenant must restore the premises to its pre-lease or pre-salecondition.

SUMMARY: A well-written sales contract can prevent fixtureproblems by clarifying what is included or excluded from a real estate sale.For more details, please consult a local real estate attorney.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

Copyright 2006 Inman News

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