Saturday
October 1, 2016

The Pain of Fixture Feuds

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The Pain of Fixture Feuds

Make sure that buyers and sellers agree on what items stay—or go—well before closing.

Could an entire sale hinge on a bathroom fixture? That’s a question buyer's agent Valerie Hartman with RE/MAX Action Realty in Maple Glen, Pa., found herself pondering hours before a scheduled closing. After all the terms had been negotiated for a $375,000 home purchase, the sellers ripped out the bidet and the kitchen’s water filtration system. Hartman’s buyers were upset.

Prevent A Showdown

1. Have a talk with your clients. During listing presentations, talk to your sellers about what's included or excluded from the sale and what they intend to take with them. Buyers' agents: Talk with your clients about what they consider the most compelling features of the home—the curtains, washer and dryer, hot tub. It should be made clear in the contract if those items will remain in the house.

2. Replace items before listing. If sellers plan to take all the ceiling fans, for example, urge them to swap out the fixtures prior to listing the home for sale to avoid conflicts later. That way, buyers see what they get.

3. Don't worry about being too detailed. Sales associate Isela DeLeon, with Target Realty in Houston, specifies the serial numbers, make, and model of the appliances included in the sales contract. "Err on the side of being overly inclusive so you’re not in a battle over whether an item is a fixture, and then stuck in a compromise," says attorney Matt Johnson, legal counsel for the New Hampshire Association of REALTORS®. 

4. Consult an attorney. Avoid providing your own legal advice about fixtures; you may be held liable if you're wrong. Most REALTOR® associations offer a legal hotline to connect members with real estate attorneys on various topics, including contract conflicts. Be aware, though, that these lawyers provide general information, not legal representation.

5. Find a mediator. Check your state or local REALTOR® associations for an ombudsman program—which calls on experienced REALTORS® who are well-versed in the Code of Ethics, state real estate regulations, and current real estate practice—to help resolve disagreements among parties.

Hartman contacted the Pennsylvania Association of REALTORS®' free legal hot-line. She learned that because the sellers never excluded the bidet or filtration system in the sales contract and both items are considered fixtures—features that are permanent and attached to the home—they should be part of the sale. Ultimately, the buyers didn’t pursue negotiations for the bidet, but the sellers paid the $1,000 for the filtration system.

While there's a broad understanding that fixtures are automatically conveyed in a sale, disputes frequently arise over how to define them, says Janet Grayson, an attorney in Portland, Ore., who also serves as counsel to the Oregon Association of REALTORS®. Perceptions can vary about which features are "securely" attached to a home. Clear communication between both sides is necessary to avoid problems. A disagreement over something as small as a bathroom mirror can lead to closing delays, end up in arbitration or court, or even scuttle a deal. One scenario that causes problems: A buyer's agent may assume an item is a fixture and not bother to include it in the offer. But the seller’s agent may look at the exact same item—say, custom window treatments or a bar in a basement held in by three screws—and consider it the seller’s personal property, says attorney Matt Johnson of Manchester, N.H., who also represents the New Hampshire Association of REALTORS®. "The last thing you want is for a client to ask you why you didn’t include a specific item in the sales contract," Grayson adds.

Standard residential purchase forms often contain language about fixtures. Typically, there's a section for buyers to list other items they want to include in the conveyance. Still, even the most careful agent can be caught off guard. Two years ago, a seller uprooted a 15-year-old apple tree and planted a small tree in its place, says buyer's agent Isela DeLeon, with Target Realty in Houston. The seller also removed an attached front porch swing. DeLeon's buyers said the tree and the swing were the home's main attractions; the seller explained the tree held sentimental value—her son’s ashes were buried around it, and she always intended to take it, though she didn't tell her agent. In the end, the closing was delayed by a week, and the seller agreed to pay $1,200 toward the purchase of a new tree and $150 to replace the swing.

"I've seen sellers replace appliances for cheaper ones. I now photograph and write serial numbers of appliances and double-check at the final walk-through that there have been no swaps. I don't assume anything anymore."

 

 

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