Fixtures & Chattels in Real estate
Wednesday Oct 09th, 2019Share
WHAT ARE FIXTURES?
A Fixture is a component that is permanently fixed to the real property. Examples range from a water tank to a furnace.
Fixtures often have rental costs or contracts with the existing homeowner that can carry over to the new homeowner if the property is sold.
HOW CAN A FIXTURE IMPACT THE SELLER AND THE BUYER?
The main impact Fixtures can have on a transaction is the financial obligation they come with.
You'll want to keep reading to explore a common scenario where a Fixture impacted both the seller and the buyer.
Scenario: You are a Salesperson representing a seller and discover the furnace (the Fixture) has been permanently fixed to the home for the last two years and continues to remain on a contract with rental costs.
First, you'll want to clarify two pieces of crucial information about the furnace:
- Is there a payout privilege for the furnace?
- If the furnace does not have a payout privilege, will the buyer assume the rent upon possession of the home?
If there is no payout privilege, you must ensure this is made known to the buyer in light of the rental costs they would face after closing.
Alternatively, if the buyer does not assume the rental, the seller must also be informed and can be advised of a possible payout option for the furnace.
After exploring this common scenario, you'll recognize Fixtures can impact all parties in the real estate transaction.
WHAT ARE CHATTELS?
Chattels are possessions that can be removed without causing destruction to the property, with examples that can range from window coverings to ceiling fans.
Chattels do not have associated rental costs and can be excluded from the purchase price, the key difference between Chattels and Fixtures.
Source of Information - TREB News September 19, 2019