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I am selling my house, what goes and what stays?

When Selling a Home, Who Gets What?

This is a far more common question than you would expect, at least until you have bought or sold a home. Then you find out how important it is to a have a firm understanding of the difference between personal property and real property. Since the matter is frequently as clear as mud, I am going to do my best to clarify it for you.

I will start by making it more confusing by sharing the legal definition of each. (But then I will clean it up, I  promise)

Real Property:

All land, structures, firmly attached and integrated equipment (such as light fixtures or a well pump), anything growing on the land, and all “interests” in the property which may be the right to future ownership (remainder), right to occupy for a period of time (tenancy or life estate) the right to drill for oil, the right to get the property back (a reversion) if it is no longer used for its current purpose (such as use for a hospital, school or city hall), use of airspace (condominium) or an easement across another’s property. Real property should be thought of as a group of rights like a bundle of sticks which can be divided. It is distinguished from the other type of property, personal property, which is made up of movable items. (Free Legal Dictionary Online)

Personal Properly:

Everything that is the subject of ownership that does not come under the denomination of real property; any right or interest that an individual has in movable things.
Personal property can be divided into two major categories: (1) corporeal personal property, including such items as animals, merchandise, and jewelry; and (2) incorporeal personal property, comprised of such rights as stocks, bonds, Patents, and copyrights. (Free legal Dictionary Online)

The easy way to remember it: 

Anything permanently attached to the property (for example cannot be removed from the home without causing damage or significant loss of value) is real property. Anything which can easily be removed from the property is personal property.

So now that we have clarified that… I guess I can answer the actual question.

Who gets what?

In a real estate transaction, the seller is transferring real property to a buyer in exchange for currency, goods, or services. So by its base function, the only things transferred in that transaction are the land, structures, firmly attached and integrated equipment, anything growing on the land (rooted in the land specifically), and the various property rights listed in the above legal definition.

Because there have been a great number of issues concerning what construes firmly attached and integrated equipment, the attorneys who write the base real estate contracts used by Realtors include strictly structured lists of what is meant by those terms. For instance, the current language in that portion of the MIBOR (Metropolitan Indianapolis Board of Realtors) contract (at the time of this writing) states:

“together with and existing permanent improvements and fixtures attached (unless leased or excluded), including, but not limited to, electrical and/or gas fixtures, heating and central air conditioning equipment and all attachments thereto, built in kitchen equipment, sump pumps, water softener, water purifier, gas grills. fireplace inserts, gas logs and grates, central vacuum equipment, window shades/blinds, curtain rods, drapery poles and fixtures, ceiling fans and light fixtures, towel racks and bars, storm doors, windows, awnings, TV antennae, wall mounts, satellite dishes, storage barns, all landscaping, mailbox, garage door opener(s) with control(s) AND THE FOLLOWING:”

And then because that list of quasi-chattel is not near long enough they graciously give us three blank lines to fill in whatever appliances, attachments, or permanent improvements that the buyer may want to include in the real estate purchase agreement.

This is followed by the words “Excludes the following”, and then we have a similar line for items the home buyer wishes for the seller to remove from the property.

So as with all things contractual, “Who gets what?” is settled by what is established law, and what is actually written in the purchase agreement.

But what if the buyer wants my furniture?

That is a great question. (and of course I think so….I wrote it) The answer to that is two parts. Yes, the seller can transfer their furniture (or any other personal property) to the buyer along with the real property. However, including personal property in a real estate contract can be problematic from a couple of different standpoints. The most frequent problems from doing this stem from lenders and the underwriting rules that they must follow in order to fund your home loan.

Now, that doesn’t mean you cannot still do it. On the contrary, in the realty business we have a piece of paper for just about any problem you can come up with. In this case, the extra form is called a personal property addendum to the real estate contract. That addendum will itemize what personal property is being exchanged and what if any consideration is being given for it. If there is a loan on the home, the consideration CANNOT come from that loan. Lenders are very specific about this.

I hope that this article has clarified who gets what, when a home is sold. If you have any questions, feel free to give me a call or email. I love talking real estate.

If you want to work with a great Realtor who really knows how to make these things work in your best interest, give Robb a call at 317-657-8059 or email him at robb@yourrealtylink.com and schedule your home listing or buying consultation today. 

 

 

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