Ralph's Weekly Legal What-If Scenarios: This Week's Answer to the Personal Property Scenario......

By
Real Estate Broker/Owner with Maui Life Homes / Metro Life Homes RS-78439 / BRE #01708344
https://activerain.com/droplet/qTY

Ralph's Weekly Legal What-If Scenarios:  This Week's Answer to the Personal Property Scenario......

This week's "What-If" Scenario was based on peronal property, in particular, missing appliances after close of escrow.

If you'd like read this week's blog, click here:

http://activerain.com/blogsview/2683986/ralph-s-weekly-legal-what-if-scenarios-personal-property-what-happened-to-my-appliances-

This week we had a hypothetical scenario that involved personal property, and how the laws (in California) apply.

 

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.

 

If you'd like to join our group and keep up with each week's Legal "What-If" Scenario posts, you can join our group here:

http://activerain.com/groups/legalscenarios

 

* 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.


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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. DeeDee Riley 01/08/2012 04:33 PM
  2. Tammy Lankford, 01/09/2012 12:48 AM
  3. David Ames 01/09/2012 09:18 AM
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Rainer
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James Lyon
LyonSF - San Francisco, CA
916-521-1214

Great well written and informative post, thanks for the info.

Jan 08, 2012 01:10 PM #1
Rainmaker
820,770
Juli Vosmik
Dominion Fine Properties - Scottsdale, AZ
Scottsdale/Cave Creek, AZ real estate 480-710-0739

Ralph, here's my issue - I'm not sure by your response IF this was an actual case and actually litagated or IF this was an actual case the courts MIGHT do..........  Would you please respond?

 

 

Jan 08, 2012 01:59 PM #2
Rainer
247,691
Doug Bullwinkel
Envoy Mortgage, NMLS 6666 - Roseville, CA
Mortgage Loan Originator NMLS #281609

This is a great topic and thanks for starting up this group to bring these issues to the members.  Personal property has always been an issue and this goes to show that a well written agreement in the beginning can eliminate many of these problems after closing.

Jan 08, 2012 07:58 PM #3
Rainer
422,958
Peggy Chirico
Prudential CT Realty - Manchester, CT
REALTOR® 860-748-8900, Hartford & Tolland County Real Estate

Great explanation, Ralph! I think this is a worthwhile group so I joined!

Jan 09, 2012 12:42 AM #4
Rainmaker
1,402,893
Jeffrey DiMuria 321.223.6253 Waves Realty
Waves Realty - Melbourne, FL
Florida Space Coast Homes

really good post Ralph. Although my State is a little different most everything applies exactly as written!

Jan 09, 2012 02:21 AM #5
Ambassador
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Ralph Gorgoglione
Maui Life Homes / Metro Life Homes - Kihei, HI
Hawaii and California Real Estate (310) 497-9407

Juli,

This was a "What-If" scenario.

But it would pretty much play out this way under these circumstances.

Litigation would first look to the written agreement, then if there was nothing in the written agreement that really specifies the issue, they would look to these criteria to determine the correct legal resolution.

I find that "What-If's" tend to make people think more, rather than try and find the case online to find the correct answer.

Jan 09, 2012 02:31 AM #6
Rainmaker
796,907
Liz Wallace
Century 21 Sherlock Homes - Rockville Centre, NY
Broker C21 Sherlock Homes, Rockville Centre, LI, N

Ralph another brilliant group.  I joined AR to learn and this is just what I was joining for.

Jan 09, 2012 03:31 AM #7
Rainmaker
361,926
Jeanne Dufort
Coldwell Banker Lake Country - Madison, GA
Madison and Lake Oconee GA

Good question and answer, Ralph.  I appreciate that you gave us a framework for deciding, rather than a decision.  That will be very helpful as we try to wrestle with these issues in each of our own jurisdictions.  Thanks.

Jan 09, 2012 05:19 AM #8
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