With rare exceptions to the purchase of pristine raw land without services, all other real estate transactions have some kind of improvements. Improvements in real estate mean anything added to the land such as buildings, fences, or even that leaning gazebo that was clearly not assembled according to the instructions. So, the question becomes what is included in the purchase, and what is excluded from the purchase, often referred to as inclusions and exclusions, and more specifically what types of things should be added to the attached or unattached goods sections in a purchase contract? Let’s consider the question and the best practices around this issue.
Everything attached is included, except...
The overarching thought behind attached goods is that if it is attached to the land or buildings then it is included in the purchase. This seems natural in most cases, such that a purchaser would not assume the seller would be taking the staircase in the middle of the house or popping the fireplace out of its brick enclosure in the great room. Because of this common understanding, AREA’s standard purchase contract states that the property includes “the attached goods except for…” which presupposes there is a common understanding of the main attached things but allows for specificity where there could be a dispute or clarity is required.
Dancing in the Grey
So, what is considered attached and what is not? How about an antique mirror in the bathroom that hangs like a picture on a hook? Flat-panel wall-mounted TVs, drapes, grandma’s heirloom chandelier, expensive smart devices like thermostats and doorbells, or the large storage shed out back sitting on a concrete pad? These are only a few examples of things that keep REALTORS® awake at night so let’s lay out 4 clarifying principles to help guide these decisions.
The damage principle
The principle here is whether or not the removal of the item would create damage, not whether it can be repaired, but if the damage is created. For example, that antique mirror can be removed, and the picture hook left with no significant damage. The tv can be removed from the bracket with no damage, but the bracket would create some significant damage in removal. The shed sitting on the concrete pad and not bolted down could be removed without damage. But what about the heirloom chandelier?
The value principle
This principle anticipates whether or not the purchaser is likely to attribute significant value to the item in question. This is subjective obviously but stick with me on the thought for a moment. If the heirloom chandelier is removed, it causes no damage and would need to be replaced with a different fixture since the purchaser would be expecting a fixture there and not just an open electrical box. But where the purchaser is likely to see value in an item as part of the purchase, the seller is best advised to remove the item before the listing where the buyer has the opportunity to fall in love with it and cause a problem. Alternately such an item could be listed in the attached goods excluded from the sale. This principle also applies to smart home devices. The buyer may see the smart doorbell and thermostat as a benefit to the purchase, and when they show up on the closing day and a dumb doorbell and thermostat are in their place, they will hit the roof. This leads us to the next principle.
Nearly all disputes or complaints I have heard over the years result from unmet expectations. Sometimes this is innocent but every time it causes hard feelings and dissatisfaction. If a seller knows they are taking certain items that the buyer may assume to stay, they are best to be transparent about that upfront. If a buyer knows they love something about the property but aren’t certain it is included, it is best not to assume but write it into the transaction. Early and honest transparency, combined with the right clarifying questions asked by the REALTOR® at the time of listing will solve nearly all issues in this regard.
This principle takes into account the idea that something permanently connected to the mechanical systems of the home becomes part of the home. Again, never assume anything. However, things such as a hot tub or central air conditioning unit hard wired directly into the electrical panel of the home are likely considered part of the home itself. Similarly, a garage heater permanently connected to gas service is likely to be considered a part of the home. Alternately something like a plug-in infrared sauna, or quick connect gas barbeque wouldn’t be considered part of the home. Regardless these things should be clarified and never assumed, but this should provide some guidance on how to advise sellers.
Unattached goods included
This is the ‘leave nothing to chance’ section of the contract. Obviously, the clearly unattached items such as appliances and window coverings would be added here if the buyer wants them included, but also anything else that could be a grey area or that the buyer wants to ensure the seller includes. That shelving in the garage, the bird bath in the garden, the can opener hanging from the cupboard, or even the disco ball in the family room, if the buyer sees it and wants it, don’t assume they stay because they are attached, write them into the agreement and have the discussion.
The variability of the transactions in real estate makes this topic inexhaustible for examples but I hope this treatise helps clarify some of the things to be thinking about. Leave nothing to chance and ask many questions to ensure the expectations of the clients are adequately expressed in the purchase contract, this will save the parties and the REALTORS® much grief, time, and money.
Provincial Practice Advisor
Bryan has many years of experience in the real estate industry including over 10 years as a former broker in the Edmonton Region.
Email: firstname.lastname@example.orgPhone: 403-209-3619