Pop quiz ahead.
Once under contract, what is one of the biggest points of contention in a residential real estate transaction involving hundreds of thousands of dollars?
- The master bedroom window valances that harmoniously coordinate with the California King duvet
- The seven hundred pound wall-mounted fountain in the back yard that facilitates the trickling of water from a gargoyle’s mouth so as to drown out the hum of 80 mile per hour traffic on the adjacent thoroughfare
- The brass plated light fixture eerily resembling an overturned spittoon that, having been acquired as a wedding gift from Aunt Betsy during the Disco Era, holds the dual titles of “family heirloom” and “antique”
- All of the above
The answer is the mounting bracket for the plasma TV.
I’m kidding. The correct answer, of course, is “5.” It’s all of that stuff and all of the other stuff we have acquired and somehow attached to our home with toggles, twelve inch flange bolts and, in my case, the glue gun of death.
The old “personal property versus fixture” dilemma rears its ugly head at least once a month in our real estate world. And it doesn’t matter how thoroughly we address the issue up front, amnesia often sets in during escrow when we see a food fight break out over who gets custody of the Bose speakers and the Fiesta ware.
Without further ado, I offer you Paragraph 8 of the California Association of Realtors (little “R”) Residential Purchase Agreement and Joint Escrow Instructions (RPA):
This is a little hard to read, so I'll help.
First, there is Paragraph 8(A), which says:
Items listed as included or excluded in the MLS, flyers or marketing materials are not included in the purchase price or excluded from th esale unless specified in 8B or C.
In other words, the MLS is not a contract where the conveyance of personal property or fixtures is concerned, nor is the bi-fold glossy brochure. The listing agent can say all day long that Bob Barker, the cute Labradoodle, is included because he was in the pictures, but unless you specifically write Mr. Barker into the contract, the buyer will be finding his own puppy at close of escrow. This is because the family pet, like any other unattached, moveable object, is considered personal property.
Personal property does not convey unless you specifically include it in the contract; fixtures always convey unless they are specifically excluded.
It sounds simple enough, except the issues usually arise when there is doubt as to how an item might be categorized. And the biggest arguments usually arise over the darn window coverings.
The RPA lists fixtures as including:
EXISTING electrical, mechanical, lighting, plumbing and heating fixtures, ceiling fans, fireplace inserts, gas logs and grates, solar systems, built-in appliances, window and door screens, awnings, shutters, window coverings, attached floor coverings, television antennas, satellite dishes, private integrated telephone systems, air coolers/conditioners, pool/spa equipment, garage door openers/remote controls, mailbox, in-ground landscaping, trees/shrubs, water softeners, water purifiers, security systems/alarms…"
Before we move on, let’s have a moment of silence while we repeat to ourselves the following disclaimer lest I have to repeat it to the judge:
The author of this blog is not an attorney nor has she portrayed one on TV, although she did take a class in environmental law in college back when slide rules were considered fashion accessories, and she even learned to Shepardize. She got a “B.”
Back to window coverings. Here’s the deal. The contract lists among the items that will transfer to the buyer “window coverings.” People of the lawyer ilk and the courts they like to frequent have consistently held that “window coverings” are all of those things not only covering but adorning a window – blinds and shutters, to be sure, but also draperies, rods, brackets, and those cute little ruffled valances that top the view portal. Nowhere does the contract say that window treatments that happen to have a throw pillow cousin residing in an adjacent room and innovated from the same swatch of fabric are exempt.
Some items in the list of fixtures in the RPA are goofy at first blush, to be sure. Take “in-ground landscaping, trees/shrubs.” And yet Steve and I watched late one evening as our former neighbor showed up under the cover of darkness while in escrow to summarily unearth several palm trees and haul them away, presumably to his new home. Goofy or not, every item listed is there because someone has tried to make off with the goods during some escrow of yore.
And notice that the list is preceded by the word “existing,” which means it is not OK to wait until the buyer has completed his inspections and then replace the Viking oven with a 1950s Gaffers and Sattler or to swap out the stylish ceiling fans with a couple of fixtures picked up at the swap meet last Sunday. If these things are important to you, pull the switcheroo before you list.
Finally, notice Paragraph 8(C). This is a new-fangled clause that was introduced with the latest RPA update. Plasma televisions and speakers are technically affixed in a manner that they might be considered fixtures. Now, the contract is clear that those items are in the personal property realm. And now, we are left to fight about who gets the mounting brackets. It’s always something.
In short, when in doubt, write it in! We’ve all got more important things to worry about during escrow – like confirming that the buyer’s loan has been approved.