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Ralph's Weekly Legal What-If Scenarios: Personal Property - "What Happened To My Appliances?!"

By Ralph Gorgoglione

Real Estate Broker/Owner with Metro Life Homes RS-78439 / BRE #01708344

January 02, 2012 03:48 AM

Ralph's Weekly Legal What-If Scenarios: Personal Property - "What Happened To My Appliances?!"

Each Monday, I'm going to post a "What If" Scenario that presents a legal issue in a real estate hypothetical situation.

Each Sunday, either the correct legal answer (or most likely legal resolution) to the situation will be posted.

These are great opportunities to keep your real estate legal chops honed and tuned as a real estate professional. And I'm sure there will be some interesting discussions going on related to these hypothetical situations. Some of you may also have had identical situations in the past that will bring some interesting light to the answers.

Here is this week's scenario:

A buyer sets an appointment with their agent to view a home. For this property showing, the seller is present during the showing.

The buyer really loves the home due to there being some very unique features about the property. One in particular is the kitchen, which includes some custom-built cabinetry that encases appliances that were a special depth for these cabinets, and were customized so that the front of the appliances match the cabinets. With the acception of the dishwasher, the range and refrigerator are not permanently attached to the property.

The buyer loves the property and makes an offer, which gets accepted. The transaction closes and on the day the buyer takes possession, they are horrified to see that the refrigerator is gone.

The buyer immediately calls their agent and lets them know about the missing refrigerator. The buyer's agent calls the listing agent to let them know about the issue, and the listing agent states that no personal property was requested and/or written into the contract, therefore the seller kept the range and refrigerator.

Who is right? Who is wrong? What will most likely be the outcome should the buyer pursue the issue through litigation?

Post your definition of what the answer is, and the correct answer along with the relative laws that apply will be posted on Sunday.

Good luck!

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Liz Wallace

Century 21 Sherlock Homes - Rockville Centre, NY

Broker C21 Sherlock Homes, Rockville Centre, LI, N

Attorney's write contracts here in the Metro area and appliances are listed in the contract. So if a buyer here signed a contract that did not mention appliances then they would be out of luck. They would of course murder their attorney while I looked the other way. Fixtures also could not be removed unless stated in the contract.

Jan 02, 2012 04:19 AM

Cindy Edwards

RE/MAX Checkmate - Johnson City, TN

CRS, GRI, PMN - Northeast Tennessee 423-677-6677

Appliances are a part of our contracts as well. This is a great Monday blog post. Thanks.

Jan 02, 2012 04:23 AM

James Loftis

RealEstate911.com - West Palm Beach, FL

RealEstate911.com

Hello Ralph,

If the appliances are part of the contact it needs to be stated in the contract. If the appliances are

not included in writing in the contract then the seller has no legal obligation to leave them with the new buyer, in my opinion.

Jan 02, 2012 04:47 AM

Juli Vosmik

Dominion Fine Properties - Scottsdale, AZ

Scottsdale/Cave Creek, AZ real estate 480-710-0739

Ralph, happy 2012 and I'm going to like this series of posts. I'm looking forward to reading the outcome of this, but, I'd say it all depends on the contract AND the original MLS listing. Did the listing sheet state it included the appliances? As to the contract, our's includes a free standing stove, but not a fridge.

Jan 02, 2012 04:56 AM

DeeDee Riley

Lyon Real Estate - El Dorado Hills CA - El Dorado Hills, CA

Realtor - El Dorado Hills & the Surrounding Areas

Hi Ralph,

Since going through a scenario similar to this recently, I would say, since it was not written in the contract the seller is right in taking it especially since the refrigerator was free standing and not built in.

Jan 02, 2012 05:37 AM

Anonymous

Forget the MLS. It is ONLY an advertisement, and not part of the contract.

Forget what either agent says...Agents are not party to the purchase contract, so their opinions do not count.

Statute of Frauds says that in order to be enforcable, a Real Estate contract must be in writing... the only thing that counts is what the buyer and seller agreed to in the written contract.

If the appliances are listed and/or checked as part of the purchase in the purchase contract, then they stay. If they are not in the purchase contract, the seller can take it. Since it is unattached and not in the contract, it is considered "personal property".

Eve in Orlando

Jan 02, 2012 05:51 AM

Doug Rogers

RE/MAX Coastal Properties - Destin, FL

Your Real Estate Resource!

Ralph,

What a great idea! As for this situation...I would normally say that the refrigerator would be personal property. That being said, the custom cabinets that wrap around the appliances may cause an issue.

If in Louisiana this issue would end up in court and the lawyers would make a killing due the seven years of litigation. The winner would be the one with the closest kin to the judge.

Jan 02, 2012 06:48 AM

Jill Sackler

Charles Rutenberg Realty Inc. 516-575-7500 - Long Beach, NY

LI South Shore Real Estate - Broker Associate

I'm with comment #1 since we come from the same area. For sure, I'm going to be enjoying this column and checking back for answers.

Jan 02, 2012 11:08 AM

Kathleen Daniels, Probate & Trust Specialist

KD Realty - 408.972.1822 - San Jose, CA

Probate Real Estate Services

Ralph, It all boils down to what the contract says. General rule of thumb - if property is movable it is personal. If fixed, it is real property. There are a few exceptions ... free standing range is one. If the refrigerator is movable - not fixed, and it is not included in the purchase agreement its personal property and the seller had a right to take it. These things happen when we ASSUME things. Best practice is to include what is wanted/expected to stay and exclude the things not wanted.

Jan 02, 2012 02:54 PM

Jeffrey DiMuria 321.223.6253 Waves Realty

Waves Realty - Melbourne, FL

Florida Space Coast Homes

Ralph, the answer will in part depend on what State you are in. In most States the frig is personal property and does not convey...however when it is personalized (I assume it matches the cabinets) a judge may likely find it to be part of the home.

The real answer is...as agents we need to protect our clients and write our contracts so that we have no question as to who gets what at closing. Buyers are not experts...we are...take care of your clients interests and assume nothing!

Jan 03, 2012 04:13 AM

Myrl Jeffcoat

Sacramento, CA

Greater Sacramento Realtor - Retired

I'm going to guess that things will differ depending which state you are in, and how the contract is written. If the refrigerator wasn't addressed contractually, then I suspect it will be deemed personal property. A range is more dicey. If it is one that hasn't been plumbed in for gas and venting, and can simply be unplugged, that might be considered personal property as well. I will say that in 30 years of selling real estate, I have never had a seller to take a range. Refrigerators are nearly always taken unless otherwise written into the contract.

I closed on a transaction in October that sounds very similar to the situation that you describe. It was a custom home with a wonderful kitchen. The refrigerator perfectly fit the space made for it by the cabinets. We were careful to address the refrigerator remaining in the contract.

Jan 03, 2012 03:31 PM

Tammy Lankford,

Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA

Broker GA Lake Sinclair/Eatonton/Milledgeville

In Georgia we use a property disclosure statement. It becomes part of the contract... it lists what stays right down to phone jacks and outlet covers. If they are checked they remain, if not they do not. Seller signs it at listing, buyer signs that he has acknowledged at signed contract... so is the refrigerator checked or not... that's all that counts in Georgia.

Jan 03, 2012 04:22 PM

Ralph Gorgoglione

Metro Life Homes - Palm Springs, CA

California and Hawaii Real Estate (310) 497-9407

OK.

Here's the answer to the above scenario:

If the matter was pursued through litigation by the buyer, it will most likely be ruled in favor of the buyer due to the legal concept of Adaption.

There are 5 points to determine the legal right to personal property:

1. Agreement of the Parties
2. Method of Attachment
3. Adaptation
4. Intention
5. Relationship of the Parties

Agreement of the Parties

When there has been a clear agreement between the parties in a dispute about fixtures, the courts will apply this test to determine who is in the right.

Method of Attachment

The next criterion to consider is whether or not a piece of property is attached. Most believe this to be the overruling factor, but the first and primary factor is whether an agreement exists between the parties. If the buyers and sellers have not agreed that a particular item is included in a sale, the next step is to look at the method of attachment. In the law of real property, fixtures are anything that is permanently attached to real property by man or by nature.

An item, such as a painting hung on a wall, is personal property. It is not considered permanently attached to the property. It is only hung on a hook or similar attachment and can be easily lifted away from the wall.

Adaptation

Was the item made specifically for the property? For example, have the drapes been custom-made for the windows? Was the carpet cut to fit the specific size or shape of the rooms? Is the oven built into the counter? If so, each has become a fixture and is no longer personal property.

The test of adaptation considers whether an item materially affects the use of the property as intended in the contract. In other words, does a particular item substantially adapt to a property for its intended use?

Intention

What does the agreement of the parties include? What did they agree to? Is there a meeting of the minds over the related item? All parties must be in agreement for a contract to exist. When the two parties to a contract agree, it overrules all other criteria for determining if property is real or personal property.

Relationship of the Parties

In a dispute about fixtures, when there is no convincing evidence of the right of one party, courts will look at whether the parties are landlord-tenant, lender-borrower, or buyer-seller. The court then makes a decision based on the relationship of the parties in the case. Usually the court will favor the tenant over the landlord, the lender over the borrower, and the buyer over the seller.

In the above scenario, the rule of adaptation applies. The refrigerator was custom made to fit and function inside the permanently attached cabinet of the kitchen, therefore the refrigerator was adapted to go along with the real property.

* The concepts in this blog post series are based on California State Law and should therefore be used as guidelines to see if the same principles apply to the real estate laws in your particular state.

Jan 08, 2012 12:35 PM

Juli Vosmik

Dominion Fine Properties - Scottsdale, AZ

Scottsdale/Cave Creek, AZ real estate 480-710-0739

Ralph, I'm confused by your answer - was this an ACTUAL case? Your first line states: If the matter was pursued through litigation by the buyer, it will most likely be ruled in favor of the buyer due to the legal concept of Adaption.

I'm not sure if that means this wasn't an actual case? You wording is IF and it will most likely......

Please explain.

Jan 08, 2012 01:58 PM

Richard Weeks

Dallas, TX

REALTOR®, Broker

Ralph,

I like the concept of this type of weekly blog. Keep it up.

Jan 09, 2012 01:10 AM

The Scott Loper Team Bux-Mont Premier Properties

Keller Williams Real Estate - Montgomeryville - Lansdale, PA

Hi Ralph,

Great blog topic. Counter depth refrigerators with cabinetry facing are usually built-in or attached and therefore a fixture. But I am not familiar with the "adaptation" term but I will check to see if that applies in PA.

Lisa

Jan 09, 2012 06:38 AM

Carla Muss-Jacobs, RETIRED

RETIRED / State License is Inactive - Portland, OR

I missed this one, but with Tammy's re-blog I'm here. Although a little late to the party it's best to write it up and into the contract when it doubt. I was thinking that the built-ins are attached with the cabinetry being built in around them. They are not free-standing, which is our designation/determination here.

Jan 09, 2012 09:15 AM