Many clients don’t understand the distinction between chattels and fixtures, and it’s up to you as a REALTOR® to educate them. The Edge newsletter talked with three real estate professionals and a lawyer about how to prevent confusion.
A chattel is a moveable possession and personal property that can be removed without injury to the property. Chattels are normally deemed to be excluded from the purchase price, unless they are specifically noted in the agreement of purchase and sale (APS). On the other hand, fixtures are normally deemed to be included in the purchase price, unless the APS specifically excludes them.
If buyers aren’t clear on the difference between chattels and fixtures, they could be very unhappy come closing day, says Rennie Lowes, a Peterborough Realtor with 13 years of experience.
“The buyers will call their Realtor with bad news that something they wanted was missing when they moved in, and it can be a real disappointment for them,” says Lowes. “The Realtor can feel helpless if the seller took the item. It may just take a phone call to clear things up, but the buyers may end up contacting a lawyer, so it’s best to prevent that from happening by being clear and specific from the beginning and getting things in writing.”
"The difference between chattels and fixtures should be explained to clients early in the process"
Lawyer Lou Radomsky, outside counsel for OREA’s standard forms committee, explains “The law says that fixtures stay with the property. Chattels are things that go. However, points of dispute can arise between buyers and sellers about whether something is a chattel or a fixture.”
Differing opinions about what constitutes a chattel versus a fixture can lead to litigation, says Stan Reljic, a Georgian Bay Realtor who has been in the business for eight years. “These disputes can end up in court with insurance companies getting involved,” says Reljic. “That’s not what you want, especially when these situations can be addressed in the first place and, in most cases, prevented.”
The difference between chattels and fixtures should be explained to clients early in the process, advises Lowes. He tells sellers specifically which items they should leave behind because those things are typically considered fixtures. Conversely, he explains to buyers which items normally stay and which ones go, outlining any exceptions.
“A buyer walk-through as part of the closing is very wise,” Lowes says. “If certain items are gone that you expected to be there, the walk-through gives you can opportunity to rectify the problem before the date of closing.”
Unfortunately, the status of some items is not always black and white. For example, wall-mounted televisions are a modern conundrum, because the brackets are attached to the wall, even though the TV is not. And are the brackets holding the drapes chattels or fixtures? The items discussed most often in this context are light fixtures and window coverings, Lowes notes. Mirrors, medicine cabinets and shelves can also be points of contention.
“Elaborate window coverings have tremendous value in a buyer’s eyes,” says Reljic, “but that doesn’t stop sellers from wanting to take them. And with an item such as a light fixture, if the seller plans to remove it, you should advise them to specify what happens afterward. Will it be replaced with a new fixture? It’s important to make it clear what will remain.”