By: Garry Shapiro, BCL, LLB, MBA and Evan Shapiro, HBA, JD

 

When purchasing residential real estate, Buyers ordinarily acquire more than just land. They are also acquiring ownership of the home and other property, whether moveable or affixed. While a Buyer may expect to receive the kitchen appliances, the washer, dryer and light fixtures, it should not be assumed. Buyers and Sellers will inevitably have their own subjective understanding of what is included as part of the transaction. To avoid disagreement, the Agreement of Purchase and Sale (“APS”) should clearly define what chattels and fixtures are included or excluded as part of the transaction.

what are chattels and fixtures?

Chattels are generally considered to be moveable or transferable personal property (as opposed to real property). Examples of chattel may include kitchen appliances, furniture, blinds and drapes (excluding the brackets).

Fixtures, in comparison, are anything that would otherwise be considered chattels that have, by reason of incorporation or affixation, become permanently attached to the land. Examples of fixtures may include the plumbing and electrical systems of the home.

The definition of chattels and fixtures leaves a substantial grey area that is often left open to interpretation. There are a number of objects that are common sources of disagreement, when the chattel may have been converted into a fixture, such as a bookshelf (if built in), lighting fixtures, a furnace or air conditioning unit, as well as wall-mounted televisions (while the television may be moveable, the bracket attached to the wall is not).

If the matter is to be litigated, a court would look at various factors to determine if the object is a chattel or fixture, like whether it is unattached to the property, except by its own weight, and can be removed without damage or alteration to fixtures or land. An object that is plugged in and can be removed without damage is generally considered to be a chattel.

how to avoid disputes

Distinguishing between chattels and fixtures can become a complicated and costly exercise resulting in litigation. Unless otherwise contained in the APS, chattels are considered to be excluded from the purchase price and fixtures are deemed to be included. The issue is whether the parties can agree upon what constitutes a chattel or a fixture.

Another related issue is whether there are rental items in the home, such as a furnace or hot water tank. These objects may be assumed to be fixtures and purchased as part of the transaction; however, if they are leased, the Seller cannot transfer ownership of the objects and the Buyer will have to assume ongoing payment obligations.

It is essential for Buyers and Sellers to clearly indicate which chattels are included and which fixtures are excluded as part of the transaction, as well as rental items, in order to avoid disputes. The parties should sufficiently consider these issues at the time of drafting the APS and, out of an abundance of caution, all relevant inclusions, exclusions and rental items should be contained in the APS.

 

Shapiro Real Estate & Business Lawyers
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