Fixtures and Chattels: When in Doubt, Spell It Out
by: Robert Pacan
Far too often, purchasers assume that certain items seen in prospective homes accompany the property on closing, but they soon find out that these items are now missing after taking possession of the home. Disputes between the vendor and purchaser may follow, causing headaches for all parties involved. This all relates back to the agreement of purchase and sale and the fixture and chattel paragraphs contained therein.
How are fixtures and chattels defined? Fixtures have been defined over years of common law cases where the court must consider the degree of annexation, the relationship of the parties interested in the land and the addition, the nature of the property added; and the purpose served and the object of annexation. By applying these criteria, one can determine whether a particular item is affixed to the house, and therefore, included with the property. In most cases, the analysis for whether an item is a fixture can be easily summarized by determining whether an item needs to be removed by tools. If so, it most likely is a fixture. Once classified as a fixture, these items become part of the real property and are transferred along with the home, meaning sellers are not supposed to remove them. Common examples of fixtures are ceiling lights/fans, built-in closets, and coat hooks. Chattels on the other hand are defined as items that are moveable and not permanently attached to land or the property. Common examples of chattels are appliances, furniture, area carpets (not tied down), paintings, and curtains/drapes.
In standard OREA agreements of purchase and sale, an opportunity exists for both parties to clarify what chattels are included with the sale and which fixtures are excluded. This is where a prudent purchaser would include items in their offer that are legally classified as fixtures in the chattels paragraph. The reason for this is potential misinterpretation by the seller into thinking that certain fixtures are “their property” and therefore believe that they could be removed prior to closing. For example, sellers may think that since they purchased a designer chandelier and installed it themselves, that they have the right to remove that chandelier before closing. That is not the case. Legally, that chandelier is a fixture and does not have to be listed in the chattel paragraph in the agreement of purchase and sale for the purchaser to get it with the property. But, for the sake of clarity for both parties, a prudent purchaser would include the chandelier in the chattel list. The benefit to both parties is that everyone is put on notice that this item will be included with the purchase of the home. If the purchaser does not include the chandelier, the seller may mistakenly think that they are free to remove their designer installed chandelier that was legally a fixture and part of the real property. Then we run into post-closing disputes, causing unwanted stress and costs.
As a purchaser, what should you list as a chattel when making an offer?
As the title of this blog post states, when in doubt, spell it out. This includes listing fixtures in the ‘included chattels’ paragraph. The reason is to make the included fixtures unambiguous to both parties as to whether the items are part of the purchase. The purchaser sees the value in a fixture and wants to put the seller on notice that this item is not to be removed from the property. Sellers become attached to certain fixtures and may think that they have a right to remove them, when legally they do not. While the law says they cannot, in the practical world, sellers may think otherwise. So be prudent and list the items you want guaranteed to stay in the home as chattels in the agreement of purchase and sale for the sake of clarity, even though they legally may be fixtures.
As a seller, what can you do to safeguard a fixture or chattel you own from being included in the purchaser’s offer?
You can give notice to prospective purchasers in your home’s listing that an item is specifically excluded. Also, prior to listing or showing the property, you can remove that item from your home and install a replacement model (works with chattels or fixtures). For example, uninstall your designer chandelier and replace it with a more basic model. If the prospective purchaser never sees something they like, they won’t attempt to include it in the agreement. However, you do have to balance whether replacing your beautiful item with something else will lower the perceived value of your home.
This blog contains strictly general information and is not intended to replace advice from a qualified legal professional. The contents of this blog are therefore not to be relied upon as such. Any facts or examples used are for illustrative purposes only and not intended to address specific incidents or problems. Use of this information does not constitute a lawyer-client relationship. Retain a lawyer for legal advice prior to making any decisions referenced in this blog.