Fixtures and Chattels - What They Are and Why You Should Care
In modern Canadian property law, the archaic terms "fixture" and "chattel" are still in use. Fixture is a pretty modern word, but chattel? What on Earth is a chattel? A thing? A process? Some kind of weird cow hybrid?
Yes, these terms can seem weird and confusing. And chattel at least should probably, at some point, be updated for the 21st century, but, as you'll see, it's one of those legal terms that have yet to be changed.
Everyone involved in the purchase or sale of Waterloo Region residential homes should learn what they mean, though. Typically, when a property is sold, chattels go with the previous owners and fixtures remain with the house. OK, That's easy right? If only.
The fact is that The Clash's "Should I Stay or Should I Go" will frequently start buzzing in their heads as homeowners roaming around their house staring at their stuff wonder just that, because the definition of fixtures and chattels is vague and could mean either thing.
In basic terms, an object that is bound to the property and is firmly fastened to a certain location is said to be a fixture. Examples of fixtures are internal doors, medicine cabinets, and light fixtures that are mounted to the ceiling or walls.
Unless specifically stated otherwise in the Agreement of Purchase and Sale, a fixture is assumed to be included with the property and in the agreed upon price. As a result, the seller must make sure that it is expressly stated in the Agreement Purchase and Sale that the item, such as a dining room chandelier, is going with the seller and is not a part of the purchase and might need to be willing to drop the price accordingly.
On the other hand, a chattel is a moveable item that is not attached to the property; examples include furniture such as chairs, couches, coffee tables, garden furniture and appliances. Despite the fact that they are frequently heavy, they are not seen as being attached to the property. Any of these items that the buyer wants included in the transaction must be clearly mentioned in the Agreement of Purchase and Sale.
But a wide range of objects, including wall-mounted televisions, closet organizers, gazebos, and sheds, could be classified as either fixtures or chattels. Due to this ambiguity, a seller might seriously wonder whether to keep or sell an item.
Additionally, if a fixture that the buyer thought would be there when they moved in was treated by the seller as a chattel and removed from the property, they might be puzzled or upset after the closing. And sometimes even think about heading to court over its absence.
In order to decide whether something is a fixture or a chattel, the courts consider a wide range of factors. Over time, the analysis has played a major role in the court's decisions rather than a strict set of written regulations.
Despite being a case from another province, British Columbia, RBC v. Maple Ridge Farms Ltd. offers a useful list of standards for sellers and buyers to bear in mind when negotiating the purchase and sale of a home in the Waterloo Region as it is usually accepted as the most complete Canadian decision available to go by.
1. A chattel is anything that is not physically tied to the property other than by its own weight and that can be removed without causing harm to the infrastructure or requiring extensive repairs.
2. A chattel is something that can be unplugged and removed without causing damage or modification.
3. Any object that is even loosely fastened to the home (i.e., cannot be unplugged) is a fixture.
4. The entire piece of equipment is a fixture if it is connected to a structure by a removable part that would be unusable without the attached element. In other words, if the object loses its primary function—that is, if it cannot be used without being permanently tied to a significant enhancement to the property of which it is a part—it will be considered a fixture. Think of a central vacuum, for instance. Without being connected to the permanent hoses inside the house's walls, the vacuum drum is worthless.
5. Even if something is deemed to be a fixture, it could still be taken out if it can be proven to be a tenant's fixture, so long as the tenant returns the space in the exact same state that they found it. This means you'll need to be extra aware of the fixture/chattel debate when selling a property that has been rented out.
6. Finally, the purpose test can be used in extreme circumstances if it is still unclear whether the object is a fixture or a chattel after applying criteria 1 through 5 and the item is exceptionally large or expensive. The Court will query, "What was the object's obvious purpose?" For instance, although a shed is not physically connected to the property, it has often been decided that it must stay there.
It is best for buyers and sellers to be extremely explicit about which items are being left with the property and which ones are being taken with the seller in the Agreement of Purchase and Sale because these guidelines are only intended to be guidelines and are subject to discussion and interpretation. This can help avoid confusion, disappointment, and perhaps high legal fees if the buyers decide to sue for the loss of something they mistakenly believed was included with the purchase on the day of closing.
Consult your real estate agent if you're not sure whether a certain item qualifies as a fixture or a chattel or whether it needs to be particularly included in the Agreement of Purchase and Sale. They can help start conversations and/or negotiations about any items in question so that there are no surprises, either on closing day or after the sale of a Waterloo Region home has been completed.