Real estate transactions are complex affairs, and surprisingly, one of the most contentious issues often revolves around the classification of items as either fixtures or chattels. Sellers may assume they have the right to take certain items with them upon vacating the property, while buyers argue that these items are fixtures that should remain. In this blog post, we’ll explore the definitions of chattels and fixtures, the confusion that can arise, and how clarity in the agreement of purchase and sale is key to avoiding disputes.
Understanding Chattels and Fixtures: Setting the Stage
Let’s begin with the basics. A chattel refers to a tangible, movable object within the property boundaries, such as appliances, furniture, or curtains. On the other hand, fixtures are items permanently attached to the land, like kitchen sinks, built fireplaces, baths, and showers. A simple rule of thumb is to imagine turning the house upside down – items that would scatter are chattels, while those that stay put are fixtures.
The Complexity of Definitions in Practice
Despite these seemingly clear definitions, the real challenge arises during the closing process. Buyers and sellers often find creative ways to define what constitutes a fixture or a chattel, leading to disputes. A notable example involves a demand from a buyer’s lawyer for the return of a shelf that was not explicitly excluded in the purchase agreement. The seller argued that the shelf was a chattel since it was easily removable, with the hooks on which it hung being the fixtures. This kind of back-and-forth demonstrates the nuances and potential for disagreement in these matters.
The Power of Clarity in Agreements
To mitigate the risk of such disputes, it is crucial to be as clear as possible when drafting the agreement of purchase and sale. The standard OREA Agreement of Purchase and Sale provides Paragraphs 4 and 5, allowing parties to specify which chattels are included and which fixtures will be excluded post-closing. Taking advantage of these provisions can significantly reduce the chances of conflicts arising.
Thorough Appraisal and Detailed Lists: A Wise Approach
Before finalizing an offer, both sellers and buyers should conduct a thorough appraisal of the property. Listing specific items and characteristics of same in the agreement, such as the color, serial number, make, and model of the items, which leaves less room for interpretation. If uncertainty lingers about whether an item is a chattel or fixture, a simple clause in the agreement’s schedules can clarify its status, either as a transferable item or one excluded from the transaction.
Conclusion: Clarity Prevails, Disputes Averted
In conclusion, the key to a smooth real estate transaction lies in the details of the agreement. By clearly specifying which items are considered chattels and fixtures, both buyers and sellers can avoid unnecessary disputes. Being meticulous in the listing of items and characteristics not only clarifies expectations but also serves as a preventive measure against potential conflicts. In the intricate dance of real estate transactions, precision in agreements is the guiding light that ensures a harmonious closing process for all parties involved.