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.
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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
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.
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?
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.
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* 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.