By JODI SUMMERS
What items are legally included and excluded from the sale of the property? It all relates to the fixtures. A fixture can be defined as,“Anything of value that is permanently attached to or a part of real property.”
Examples of fixtures include installed wall-to-wall carpeting, light fixtures, window coverings and landscaping. Fixtures are a frequent subject of buyer and seller disputes. The best advice is that when in doubt, get it in writing.
The legal concept of “fixtures” allows interested parties to determine whether a particular thing should or would be characterized as “real property” or “personal property,” and whether or not it should be included in the sale. Real estate is legally called “real property,” while movables are called “personal property.”This can be a gray area, as use of real estate or personal property often depends on circumstances.
“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,” said real estate attorney and columnist Bob Bruss.
Trade fixtures are an exception. They are articles of personal property annexed to real property but which are necessary to the carrying on of a trade and are removable by the owner. A 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.
The easiest way to determine who gets what in a real estate transaction is to specify it in a contract.When a buyer desires an item that may be perceived as a fixture — such as saws, work benches or window air conditioners — included in the sales price, the buyer must itemize that personal property in the sales contract.
If the seller wants to exclude any fixtures attached to the structure, those items must be itemized in the written contract, or the jury will say 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, mailboxes, and landscaping equipment,” Bruss said. “The printed sales contract can change the result.”
Professor Cyril A. Fox, an expert in land transfer and finance at the University of Pittsburgh School of Law, recognizes three categories of personal property, which may be found on real estate: ■ “Movables” or furniture: These remain personal property at all times, regardless of the intent of the party who places them on the land. These are items which can be readily removed without causing permanent damage to the property. ■ “Fixtures” or “other chattels:” These will take on the character of “movables” or “immovables” according to the intent of the annexor (the person occupying the property at the time), or according to any agreement between the annexor and the title holder on the property. ■ “Immovables:” These become part of the property as a matter of law, regardless of the intent of the annexor. They are items that cannot be removed without doing substantial damage to the property or the item being removed.
Legal experts note that category two is the grayest area. Should the “fixture,” be treated as a “movable” (furniture), which belongs to the annexor, or should it be treated as an “immovable” (real estate), which belongs to the owner of the property?
A good example is window coverings. Let’s say you have wood window blinds with draperies hanging 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,” Bruss said. “The wood window blinds, if permanently attached to the structure, are considered fixtures, which are included in the home sale.” 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: ■ 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 property’s sales price.
However, if an item can be removed without damage to the structure, it is not a fixture. ■ 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. ■ Adaptability to property use: When personal property is built into a property, it indicates it has become a fixture, which is included in the sales price. ■ 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. ■ Relationship of the parties: As a general rule, if a lawsuit develops, courts tend to favor a buyer over seller; a tenant over landlord and a lender over borrower.
For information on Southern California commercial properties there is a great information blog at www.socalindustrial-realestateblog.com.
Originally published in the Santa Monica Daily Press print edition on June 28, 2006. Read the original PDF.