How to Know Which House Fixtures Can Leave with the Seller
Let’s say you’re in the market for a new home. You go to an open house in your target area and find “the one.” Walking in, you’re wowed by the layout, the natural lighting, and the kitchen—oh, the kitchen! It has brand new, ultra-modern frosted glass cabinets, all new high-end stainless steel appliances, and a light fixture hanging over it all that ties the whole ensemble together. It’s perfect. You submit an offer that day and close within a month. Then, keys in hand, you step into your new home—and it’s empty. All the furniture is gone and the kitchen is gutted—no cabinets, no appliances, and no light fixture. Can the seller really take all that stuff? Well, that depends on the law governing fixtures and the terms of your contract.
As the law governing fixtures goes, fixtures generally come with the realty, whereas personalty generally does not. The terms “fixture,” “realty,” and “personalty” each have a specialized meaning within real estate law. The terms “realty” and “personalty” each have relatively concise meanings, which are rarely controverted: Realty is the land and any improvements, such as the house, and personalty is any moveable personal property. The term “fixture,” however, has a much more convoluted meaning, which is frequently a source of contention. A fixture is essentially personalty that has become realty; that is, it is personalty that has been so permanently affixed to the realty as become part of it. So when is something “permanently affixed” to realty? Courts consider the following criteria when determining what constitutes a fixture:
(1) the mode and sufficiency of annexation, either real or constructive;
(2) the adaptation of the article to the use or purpose of the realty; and
(3) the intention of the party who annexed the personalty to the realty.
Criterion (1) above essentially asks how affixed the personalty is to the realty. For example, is it nailed down such as a cabinet would be, or is it merely sitting on the floor and connected with a power cord and perhaps a water or gas line, such as most appliances would be? Criterion (2) asks whether the personalty is custom made or selected specifically for the realty. For example, a mirror or chandelier may be a common variety that could be bought from practically any home décor store and simply hung in the realty, or perhaps it is of such a size and shape that it would likely not be appropriate for hanging anywhere other than where it is in the realty. Criterion (3) is given the most weight, but is essentially determined by the other two criteria. For example, if something is nailed down, it could be considered evidence that it is intended to stay put, and if something appears to have been made or selected specifically for the space it occupies or purpose it serves, that could be considered evidence that it not be moved to anywhere else.
Considering the above criteria, virtually any court would find the furniture to be personalty, and the cabinets to be fixtures. But what about the appliances and the light fixture? Depending on the jurisdiction, these may go either way. The appliances may fit into a certain space in the kitchen, such in a gap between two counters or between the counter and a wall, such that a court may consider them adapted for use in the realty. Also, the sophistication of a particular appliance’s connection may be weighed differently by different courts. For example, a court may find a refrigerator to be personalty because it is merely plugged in, but may find an under-counter dishwasher to be a fixture because it is connected with a water line and drain line in addition to being plugged in, and may also be secured to the counter with a few anchor points. The light fixture, despite being referred to as a fixture in nomenclature, may also go either way. If it merely hangs from the ceiling and is plugged into an outlet, then a court is more likely to consider it personalty, but if it is hardwired and fastened directly to the ceiling, then a court is more likely to consider it a fixture.
Nevertheless, the general rule—that fixtures come with the realty and personalty does not—may be modified by agreement, and standard real estate form contracts such as the one promulgated by the Texas Real Estate Commission (TREC) usually have a blank to fill in with specific fixtures that will be removed and specific personalty that will remain. The best practice is that the contract should specifically list any items the seller wishes to remove, and any items the buyer wishes to remain, regardless of whether the items are fixtures or personalty. That way, even if the seller and buyer disagree about the nature of the item, they have agreed that the specific item is to be removed or is to remain.
Incidentally, there is a particular type of fixture, known as a “trade fixture,” that is treated as though it is personalty despite technically being a fixture, and may therefore be removed by the seller. In practice, trade fixtures are most often installed in leased commercial property by the tenant, who desires to take the fixture with them when the lease terminates. The general rule of fixtures in the lease context is that fixtures installed by a tenant become the property of the landlord. Trade fixtures may be industrial ovens or other specialized food preparation appliances, X-ray or MRI machines, or any other machinery or equipment that is particularly suited to the tenant’s business. Again, the best practice is to state in the lease agreement what trade fixtures the tenant will install and who they will belong to when the lease terminates.