Real Property vs. Personal Property

In a Real Estate transaction many First-time Homebuyers are unaware of the legal definition of property, what constitutes property, and which kind of property is included with the sale or purchase of a home. For example, say you just bought your first home. You had fallen in love with the antique light fixtures and free standing stove in the kitchen. However, as you walk into your new home you realize all antique light fixtures have been disconnected and are missing and your free standing stove is also gone. You can see the importance of understanding property definitions and the magnitude of a clearly defined contract. According to Real Estate Law in California by Bowman/Milligan, Real Property is lands, buildings, or immovable property; whereas Personal Property (chattel) is moveable property (aka. anything that can be moved or picked up). These definitions become convoluted when personal property becomes real property by means of attachment. This means anything attached (bolted, screwed, nailed, glued ect.) to the Real Property may become the Real Property. There are hundreds of situations and variables where Personal Property becomes Real Property and Real Property becomes Personal Property. For example, crops may be real property unless under a lease hold and then becomes personal property during harvest. However whose personal property the harvest becomes (whether Buyer or Seller) needs to be specifically defined in the contract.

In this blog, I am talking only about Personal Property in a typical residential transaction. Over the years many agents have succumb to paying for the replacement of personal property for their clients (including myself) for missing items in the contract which was not in writing and overlooked as part of the purchase. My Seller, in her world travels, had collected porcelain fixture plates which covered most of the electrical switches in the home. Upon the final walk-through, the Buyer noticed all the porcelain plates had been replaced with generic plastic switch plates. Now my Seller had never mentioned her attachment to these covers or indicated her intentions to remove them prior to close of escrow. The switch plate dilemma escalated into a major issue with the Buyer and Seller. The Seller would not sell the house with the plates attached and the Buyer was not buying the house without them (apparently the fixtures were worth $250,000 to the Buyer and the home was a nice addition). In order to keep the transaction alive, the selling agent and I found and paid for the most expensive porcelain switch plate covers money could buy. I could write fifty pages or more about the imprecise aspects of personal property vs. real property, but in a nut shell “if in doubt get it in writing.” Technically, according to California Law, the Buyer owned those fixtures upon executing the contract. Don’t ever assume everyone is on the same page when it comes to real estate transactions. More times than not, they are not even in the same library.