This article explores the often-asked question: “is it a fixture or is it personal property?” Because the answer may depend on your perspective, the answer is not always clear. In the seller’s perspective — everything goes — sellers characterize items as personal property. On the other hand, with the buyer’s perspective — everything stays — buyers presume that items will remain with the property. The truth, though, often lies somewhere in the middle. Good forward planning when the property is listed and toured and when the offer is negotiated will lead to less consternation at closing.

Over the years, the following items are the ones that most frequently put the parties at odds:

• Light fixtures, bathroom mirrors and other decorative mirrors.
• Living room items such as TV mounting systems and surround sound systems as well as the system components.
• Kitchen items including kitchen islands, movable dishwashers and wood-burning stoves.
• Carbon monoxide detectors, water treatment systems and LP tanks.
• Miscellaneous items including beer sign lights, space heaters and basketball goals.

The listing broker's perspective

Proactive planning begins when the listing broker inspects the property prior to listing. This is the best time to identify items that may lead to trouble later down the line. Keep an eye out for water softeners, water treatment systems or LP tanks; if any of these items are present, ask the property owner whether the items are rented or owned. If the seller is unsure, or if the property is REO, look for labels on the items that may indicate if the items are rented and call the phone number on the label(s) to inquire. 

As the listing broker, don’t hesitate to ask questions. Does the seller have a financial, emotional or sentimental connection to any items defined as a “fixture” in the offer or items that may be disputed? If so, recommend or suggest that the seller remove such items even before showings begin. The buyer cannot ask for something to be part of the transaction if he has never seen it; the buyer won’t know what he’s missing. 

If the seller plans to take specific items later, take time to create an inventory of those items. Most importantly, be sure to exclude each of these items from any offer to purchase. When the offer is presented, be sure the seller is thinking beyond just the purchase price and closing dates when deciding to accept or counter the offer; when negotiating, the seller should be mindful of which fixtures and personal property they would like to take with them after closing.

The cooperating broker’s perspective

Just like the listing broker, when you inspect the property as the cooperating broker, make note of any items in which the buyer shows specific interest. Look for any items that could be questionable and make a list. When negotiating the offer, be sure to include these items in the offer as inclusions — or exclusions if seller wants something removed. 

Be a good listener when working with the buyer. What features of the property are important to the buyer? If the buyer “loves the décor” — find out exactly what they would like included with the sale. Your job is to identify the items that, given their nature, may be fixtures or may be personal property of the seller. To avoid the issue of determining what stays or goes, make an inventory list of what the buyer wants with the property, and incorporate that list into the offer. Look for items that have been issues in the past — and don’t assume. 

“But it was in the MLS!” the buyer tells you. Remind the buyer that the MLS and/or marketing materials describe only what is being offered and do not determine what will actually be part of the offer. The listing matters for what is offered for sale, the MLS sheet matters for what is offered for sale, but the offer determines what is sold. The offer includes a caution to remind parties what is in the marketing materials is what is being offered, but unless a specific item is enumerated in the offer or is considered to be a fixture, it is not a part of the transaction. Again, both brokers should cross-check inventories with the terms of the offer. 

The offer's perspective

The primary source for guidance is the offer to purchase:

• First, the offer specifically enumerates more than 30 items in the definition of “fixture.”
• Second, the offer gives a three-prong test to analyze other items. 
• Third, the offer gives the buyer and seller the opportunity to specifically list items to include or exclude as a part of the transaction. 

When in doubt; write it in or out. Lines 14-18 of the WB-11 Residential Offer to Purchase allows the parties to expressly negotiate to include or exclude items. 

The three-prong test

The three-prong test can be helpful about handling a disagreement between the parties after the offer has been negotiated. First check the definition of “fixture” at lines 185-192, and if the answer is not available, apply the three-prong test. Given the sometimes subjective nature of items, the three-part test, created by the courts, is built into the offer to help parties and REALTORS^® characterize items as fixtures or personal property. The three-prong test includes these three key questions:

1. Is the article physically attached and not easily removable without damage? 
2. Is there a special adaptation between the article and the premises? 
3. Are there general community “customs”?

If practice makes perfect, what would you do with the following example? Say that during inspection, you find a whole-house reverse osmosis system. Does it stay or go? Apply the tests by first asking if the system is on the list of defined fixtures in the offer. By definition, water treatment systems are indeed considered fixtures, even if they are rented. Therefore, this water system stays with the property unless specifically excluded. If the system is rented, the seller must intentionally exclude it from the offer. If the seller does not exclude the system, either the seller and/or the broker will be purchasing the system for the buyer. 

Mirror, mirror on the wall

Apply the tests. First determine whether or not the mirror is on the list of defined fixtures. It is not, so your next step is to apply the three-prong test:

1. If the mirror is removed, will it be difficult and will removal damage the wall? 
2. Was the mirror specifically adapted to the premises? Was it handmade to fit to a specific location, and finished or stained to match? 
3. Have mirrors similar to this one been treated as fixtures in recent transactions? 

If the answer is yes to any of these questions, the mirror would appear to be a fixture and should remain with the property, but sadly none of these tests are conclusive on their own and may lead to different conclusions. Legal counsel may need to be consulted if the parties cannot reach an agreement. 

Everyone's perspective

Whether an item is a fixture or personal property is best addressed at the time the offer is drafted and negotiated, not at closing. Per the buyer’s instructions, cooperating brokers draft the offer identifying and inventorying items the buyer wants to include. When presenting the offer to the seller, the listing broker will compare the offer’s defined fixtures, inclusions and exclusions to the seller’s expectations. For items that may be questionable, trust the old saying; “When it doubt, write it in or out. ”

For more discussion on fixtures, see pages 11-12 of the November 2003 Legal Update, “Overcoming Residential Transaction Obstacles,” at www.wra.org/LU0311.

Tracy Rucka is Director of Professional Standards and Practices for the WRA.