Contract Clarifies What’s Included in Sale

Home sales are setting a rapid pace in most cities. With mortgage interest rates continuing to stay low, the traditional peak spring home-buying season promises to be an excellent time to be a buyer or seller.

But a confusing aspect of home sales involves determining what is and is not included in the sale. Bitter fights between residence buyers, sellers and sometimes even their real estate agents too frequently erupt over what items automatically go along with the property.

Ask any experienced real estate sales agent and they will usually have fixture “horror stories” to tell, especially about dining room chandeliers. For some unexplained reason, many home sellers presume they can take this light fixture with them. However, the law of fixtures is on the buyer’s side because, unless specifically excluded, all light fixtures are automatically included in the sale. But sellers are entitled to remove the light bulbs, which are personal property not included in the sale.

Home buyers, sellers and their realty agents should be aware that the simple law of fixtures determines when personal property has been converted into real estate and is included in a real property sale.

After movable personal property is permanently affixed to a building or land, it becomes known as a “fixture,” which is part of the realty. The attachment can be by bolts, screws, nails, glue, cement or any other means of permanent attachment.

For example, when a dining room chandelier is attached to the ceiling by bolts or screws, it is converted from personal to real property. If the seller doesn’t want to include an item in the sale, it should be removed before showing the home.

Home sales fixture problems can be prevented by not only understanding the law of fixtures but by using a well-written sales contract.

A contract clause that avoids fixture misunderstandings reads: “All existing fixtures and fittings that are attached to the property are (if owned by seller and unless excluded below) included in the purchase price and shall be transferred free of liens. These shall be deemed to include, but are not limited to, the following: existing electrical, lighting, plumbing and heating fixtures, fireplace inserts and attached fireplace equipment, solar systems, built-in appliances, screens, awnings, shutters, window coverings, attached floor coverings, television antennas, satellite dishes and related equipment, private integrated telephone systems, air coolers/conditioners, pool/spa equipment, water softeners, security systems/alarms, keys to all exterior locks, garage door openers/remote controls, mailbox, and in-ground landscaping.”

Any fixtures the seller wants excluded from the sale should then be listed. Next, the buyer should list in the purchase contract any non-fixture personal property items she or he wants included, such as patio furniture, free-standing stove, refrigerator, washer and dryer.

If a legal dispute arises as to whether a personal property item has become a real property fixture that is included in the property sale, five basic rules are used by courts:

* Method of attachment. The most important test for determining if an item has become a fixture is its attachment to the land or building. If it is nailed, bolted, glued, wired, built in or cemented, then the personal property has become a fixture.

However, if the item can be easily removed without damage, such as removing hanging drapes from a drapery rod, unscrewing a light bulb or unplugging a refrigerator, the seller can remove that personal property (unless the buyer listed it on the purchase contract as being included).

Wall-to-wall carpet that is nailed, tacked or glued to the floor is included in the sale because it has become a fixture. Similarly, linoleum tile glued to the floor is part of the structure. But area rugs that are not permanently attached to the building are personal property.

Window coverings, unless included by contract, often cause trouble. The drapery rods, since they are screwed to the wall, must remain because they are permanently attached fixtures. But drapes are personal property that the seller can remove (unless included in the sales contract).

* Agreement of the parties. The buyer and seller can agree in the purchase contract to include or exclude specific items. Everything is negotiable. But any fixtures the seller wants to exclude must be specifically listed in the sales agreement; otherwise, they are automatically included.

* Intent of the buyer and seller. The intent of the buyer and seller often becomes important in determining if a disputed item is included or excluded.

For example, if the home’s multiple listing service description says “beautiful Sub-Zero refrigerator matches kitchen cabinets,” that indicates the seller intends to include it in the price.

* Adaptability for use with the property. Items that are specially adapted to the property, such as built-in stereo speakers, are usually considered to be included fixtures. However, the stereo equipment that can easily be unplugged remains personal property and is not automatically included in the sale.

* Relationship of the parties. When the buyer and seller cannot resolve their disagreement and litigation becomes necessary, courts usually favor buyer over seller, tenant over landlord and lender over borrower.

Robert J. Bruss is a syndicated columnist as well as a real estate investor, lawyer, broker and educator in the Bay Area.