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So What’s All Included?

Posted on April 22, 2015

So What’s All Included?Lighting-Trend-White-is-red-hot

Determining whether an item is a fixture to be included in the sale of the house or personal property that is not included in the sale can leave buyers, sellers, and agents in a precarious situation.  For instance, imagine providing a final walk through of a property with your clients.  Everything is going well until, to the clients’ dismay, the dining room’s antique chandelier is inexplicably missing.  The chandelier was not hardwired to the house’s electrical system and was attached to a chain that is still fastened to the ceiling. A call to the seller’s agent reveals that the chandelier is a family heirloom and the seller never intended to include the chandelier in the sale.  A review of the purchase agreement provides no guidance on the issue.   The buyers are quite upset by this turn of events and turn to you for advice.   Is the chandelier a fixture?

Generally, Nebraska courts consider a fixture to be personal property that has become a part of the real estate. This vague definition allows many common items to fall within a broad grey area.  Items such as wall-mounted TVs, sheds, playsets, or hot tubs can be difficult to categorize, depending on the facts.  To sort out the confusion, courts rely on three factors when determining if an item is “a part” of the real estate: (1) whether the item is physically attached; (2) the item’s connection to the use or purpose of the part it is located; and (3) whether or not the owner intended to make the item a part of the real estate.  Courts place the most weight on the third factor.

Recently, the Nebraska Supreme Court used this test to determine whether interior doors are considered fixtures.  In Griffith v. Drew’s LLC, a case that began in small claims court, the seller owned a dental clinic building that his wife leased.  Sometime in 2004, the wife/tenant purchased commercial, 60-minute fire doors for the interior of the building.  Around eight years later, the wife/tenant decided to move her practice, so the owner placed the property up for sale.  The owner found an interested couple that wished to purchase the property and renovate it into a personal residence.  A purchase agreement was executed in February, 2012 and the property closed on June 1, 2012 – three days after the owner had removed the commercial interior doors and replaced them with residential interior doors.  The record showed that the buyers failed to inspect the property within the 24-hour period before closing, even though the purchase agreement allowed them to do so.  Furthermore, the parties never discussed whether the interior doors would stay with the property, and the seller did not state that the doors were excluded from the purchase agreement.  To little surprise, the Court held that the doors were indeed fixtures.  Applying the three factor test, the court found that: (1) doors are physically a part of the real estate, even though they are often hung and not fastened to a building; (2) the doors were reasonably necessary for the purposes for which the real estate was being used – they served to divide the interior of the building and to enclose rooms, supplying privacy; and (3) the record established that the wife intended to make the doors a permanent part of the real estate, given the relationship between the tenant and landlord.

As illustrated in Griffith, even small fixture claims can lead to major headaches.  Given that the strength of each fixture claim is based on its own set of facts, it is difficult to affirmatively state what items are or are not fixtures.  Therefore, the best approach to prevent fixture disputes is to be proactive.  Make sure to communicate with the other party, making it clear what items are or are not included in the sale, and then record all items in the purchase agreement.   Also, never list fixtures that the seller intends to keep in the property’s MLS description.  This approach prevents ambiguity, litigation, and, most importantly, unhappy clients.

By: Ryan Dorcey
The HOPPE Law Firm LLC

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