What conveys with a home purchase
"Does this stay with the home?" It's a question I get whenever I show homes to buyers, and certainly a fair question. Everything is negotiable in real estate. It's a good reminder: everything is negotiable.
The distinction we make in the contract is between fixtures and personal property. Fixtures are "affixed," and stay when the home is bought and sold. Personal property is not affixed to the home (or land) and the sellers can take personal property, unless it's specifically stated in the contract.
In this article, we'll take a look at the difference between fixtures and personal property, cover some best practices I maintain when making an offer, and fully explain what conveys when buying a home.
Fixtures
Fixtures are affixed to the real estate - they're meant to be permanent. There's a four-part legal test that courts go through in the event of a dispute. I'll put that at the end since it's better understood after learning the main points.
Fixtures always convey with the real estate transaction unless specifically excluded in the contract. Yes, there are paragraphs in the contract where a buyer or seller can specify items that convey (or not) with the sale.
Examples of fixtures are water heaters, air conditioning units, lighting fixtures, and mirrors. That heirloom antique mirror in your entryway? Make sure to specify you're taking it so it does not convey with the home.
Personal Property
Personal Property does not convey with the sale, unless specifically stated. The definition of personal property is murky: it's anything that isn't attached. See why we have disputes?
TVs, entertainment centers, furniture, and even refrigerators are considered personal property and will not automatically convey with the home.
The biggest disputes occur over washers, dryers, and refrigerators. These are considered personal property. They are merely "plugged in" to the home, and not considered affixed.
Says it conveys in MLS
The MLS (multiple listing service) is not legally binding.
Even though plenty of home listings will state "washer/dryer and refrigerator convey," I will write it again: that is not legally binding. At any moment, the seller could change their mind and decide to take those items with them. Unless it's in the contract.
It's a nice gesture to mention it in MLS. Nice gestures don't make real estate contracts. If something is said to convey in MLS, make sure it's included in the contract.
Best Practice: State it on the Offer to Purchase
Fortunately for us in North Carolina, the standard Offer to Purchase and Contract is ready to handle the items that convey - or not - when purchasing a home. The standard contract comes with built-in items that, unless otherwise identified, will convey with the purchase. This portion (Paragraph 2) of the contract is not intended to be an exhaustive list. However, if an item appears in the list, it is deemed a fixture.
Further down, either party may specify other items that do not convey when buying the home. As the seller, if you're planning on taking any fixtures with you, this is where you list them. That heirloom mirror I mentioned above? List it here.
Lastly, Paragraph 3 gives us room to specify personal property that will stay with the home. This is where it's best practice to list things like the washer, dryer, and refrigerator. If the seller happens to have a second fridge in the garage, I always include the make/model and serial number of the desired fridge to make sure there isn't any confusion.
Know What Conveys with the Home
The difference between fixtures and personal property leaves plenty of grey area for confusion. It's one of the primary disputed topics between buyers and sellers. Whether you're buying or selling, if there's an important item you want to take with you (or convey with the home purchase), make sure to state it in the contract.
The Total Circumstances Test (IRMA)
Intent. Did the person who installed the item intend for it to be a permanent installation, or be removable?
Relationship. What is the relation of the person affixing the item? If they're the owner, it's likely they meant the attachment to be permanent, and is therefore a fixture.
Method. How is the item affixed to the real estate? A gazebo's supports that are in poured concrete is more permanent than a gazebo that's resting on top of a concrete patio.
Adaptation. Has the item been tailored for the space? Free-standing shelving that's customized for a particular closet could be considered a fixture, even though it's free-standing.