30
Mar 2016
Chattel or Fixture
What’s the Difference between a Fixture and a Chattel?
By admin

As the Latin phrase goes: quicquid plantur solo, solo credit. That means that what is fixed to the land becomes part of the land. The basic rule of fixtures and chattels is rather simple: a seller can take all chattel with them, but they must leave all fixtures in place. There is no all-inclusive definition of a fixture, however, and complications often arise. Many buyers arrive on moving day to find that many of items that made them want to purchase the property in the first place are gone.

Today we’ll look at the different definitions of fixtures and explain why buyers need to have a lawyer review their purchase agreement and have a qualified title insurance company perform a thorough search on the property. 

Fixture or Chattel?

Improvements to real property like air conditioners and solar panels and land improvements like fences and paved parking areas are attached to the property and therefore are considered fixtures. Fixtures may be transferred, leased, or taxed as a part of the real property. Chattels are moveable objects that could be removed without damaging real property. Furniture and picture frames are common examples of chattel.

Fixture Definition: Commercial & Residential 

Under Article 9 of the Universal Commercial Code, fixtures are defined as “goods that have become so related to particular real property that an interest in them arises under real property law.” The problem is that the UCC does not draw a clear line between real property and personal property.

With regard to residential property, the distinction is also vague. Some states have specific definitions set down in civil codes, but others do not specifically describe the nature of “attachment,” which is essential to separating a fixture from chattel. It is important to have a qualified NY title insurance company search for all possible security interests having to do with an Article 9 UCC lien protecting a creditors interest in a fixture.  

Historical Definition of Fixtures

A foundational case on what constitutes a fixture dates all the way back to 1853 in Teaff v. Hewitt wherein the Supreme Court of Ohio articulated three criteria to decide whether goods are fixtures or chattel:

Whether the goods are actually attached to the real estate

Whether the goods have been fitted and adapted to be used with the real estate

Whether the party intended the goods to be a permanent accession to the real estate

The third criteria is especially important. The seller’s intent is probably the most important factor for classifying a fixture as real or personal property—and it’s also the most difficult to distinguish.

Importance of Purchase Agreements: Fixtures & New York Real Property Law

The decision in Fisher v. Baronti, a 2003 case in New York City, settled a disagreement between a seller and purchaser regarding the definition of a fixture. The plaintiff purchased a single-family home from the defendant. After moving in, the defendant discovered that the hose and attachments for the central vacuum system had been removed. The plaintiffs argued that the hose and attachment were a fixture that should have been left behind, while the defendant argued that they were chattel. 

Though the hose and attachment fit one criteria of chattel—they were removed from the property without causing damage—they were also essential to the vacuum system, which was a fixture. To find a solution to the dispute, the court looked at the agreement between the parties, which stated that the sale included: “all fixtures and articles of personal property now attached or appurtenant to the Premises, unless specifically excluded below.” Because no exclusion was stated for the hose and attachments, the court ruled that they were fixtures that should have been left behind by the seller.

Pennsylvania Courts:

PA courts have stated the criterion of a fixture in a dwelling house is actual and permanent fastening to the freehold.  The commonwealth uses two tests to determine whether or not a cattle has been converted into a fixture.  First, is it adapted to the use and purposes of the realty to which it is attached.  Secondly, was a permanent accession to the realty intended. Just like when handling PA title insurance issues the PA title company must look at oil and gas leases, similar situations happen in the fixture game.  A highly litigated matter has involved the oil and gas wells, pumping equipment and other material used during the process of removing oil and minerals pursuant to ones rights to do so.  Be extra diligent about having a PA title company prepare the proper endorsements for such as well as making sure your legal counsel has prepared proper provisions within the agreement of sale to include such possibilities.   

Protect Your Investment with World Wide Land Transfer

As the case above clearly illustrates, courts rely heavily on written agreements between buyers and sellers to resolve fixture disputes. To make sure you’re buying what you think you’re buying, work with a qualified title insurance company to uncover any hidden liens on fixtures to the property and have a lawyer review the purchase agreement for fixture exemptions prior to making a purchase.

For more information on Settlement, Escrow, and Title Insurance from World Wide Land Transfer, please visit our homepage today.

Other Related Posts:

The Validity and Expiration of UCC’s in New York

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