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Relin Real Estate Quarterly
A Quarterly Newsletter for Real Estate Professionals
January – March 2022
Topics Covered This Quarter:
Words Matter: Avoid Confusion in the MLS Listing and Purchase Contract, Jacqueline A. Carosa, Esq.
Words Matter: Avoid Confusion in the MLS Listing and Purchase Contract
The Purchase and Sale Contracts used by our local real estate agents are Bar Association approved forms that have undergone revisions and modifications over time. The contract language is designed to simplify the negotiation process and provide clear, consistent, agreed upon terms that agents and attorneys can rely on in transaction after transaction. The MLS Listing agreement is also formatted to create consistency and reduce the possibility of human error. Although each of the forms intends to create clarity, confusion can find its way into the deal through the use of ambiguous, vague, or inaccurate language. Language describing a seller’s personal property is one area in which an agent’s choice of words can create confusion and become problematic for clients.
In contrast to “real property,” which includes the land and everything permanently affixed to it, “personal property” can be removed from the land or home without causing damage to it. Furniture, moveable appliances, clothing, food, dinnerware, potted plants, and gym equipment are examples of personal property. If you were to tip a house on its side, these are items that you’d reasonably expect to come tumbling out.
The Purchase Contract gives us some good insight on personal property that is so affixed to the real property that it is presumed to be included in the purchase. These “fixtures” are items that are personal in nature but because of their affixation to the property it can be argued that they should be included in the purchase. Some of the examples listed in the Purchase Contract include electric garage door openers, ceiling fans, water softeners, central vac systems, TV wall mounts, and built-in shelving, appliances, and cabinets. These are items that could require some disassembly, uninstallation, or would leave some damage to be repaired if removed. By affixing them to the property, the seller has expressed an intent that they become part of the real property. Compare window blinds and curtain rods, which are also examples of fixtures, to the curtains themselves. In most cases, curtains are considered personal property because they can be removed without causing damage to the home. However, if, for example, the curtain is mounted on a wood frame and attached to the wall, it would likely be considered a fixture.
If fixtures are not going to be included in the sale, or the seller intends to replace the existing items with something of equal value, it should be well-noted in the MLS Listing and Contract. For example, if your seller intends to replace the current dining room chandelier with another light fixture, the MLS Listing should disclose as much. Better yet, the seller should simply remove or replace the items prior to listing and showing the property!
We have seen instances where a listing agent’s description of the property can cause a fair amount of confusion and can create expectations that lead to issues after contracting and jeopardize the closing. Take the “home theatre,” for example, that’s described in the MLS Listing as: “The lower-level features a home theatre, sure to entertain your family and friends.” Now, imagine that the seller intends to remove all of the home theater components that aren’t affixed to the property: the projector, the theatre chairs, the speakers, etc. Once the items are removed, can the space still be fairly described as a “home theatre”? Not likely. Nevertheless, the listing agent’s description creates an expectation that the home theatre components are included in the purchase. If the sellers intend to take the components, a more accurate description might be something like “The lower level includes a space currently used as home theatre; however all components are negotiable and are not included with the purchase.”
Descriptions of home gyms and game rooms can entice a buyer and create the same kind of expectation that the contents of the rooms are included with the purchase. Again, a seasoned sellers’ agent will communicate with the seller, understand what the seller intends to remove from the property, and clearly spell it out in the MLS Listing. If the listing agent and seller are not on the same page, confusion results in expectations that are sure to lead to issues before closing.
Regardless of what’s set out in the MLS Listing, personal property to be included in the purchase needs to be clearly delineated in the Purchase Contract. As a buyer’s agent, it’s important to help the buyer understand the personal property that is included with the purchase and the items that are negotiable and/or excluded. A buyers’ agent should not assume that moveable appliances, home theatre components, gym equipment, game tables, or hot tubs are included with the purchase. If the buyers want the items to be included in the transfer, the purchase contract should state as much. Page one of the Purchase Contract contains a section for the recitation of personal property, but there is also a separate Personal Property Addendum that should be used to delineate each item of personal property that will be sold with the house. Doing so is the best way to avoid misunderstandings and unintended consequences.
Avoid confusion, disappointment, and frustration during the closing process. Describe the property clearly in the MLS Listing. Be sure that the Purchase Contract recites all of the personal property to be included in the transfer. When in doubt, err on the side of caution and recite the item in question. If it’s overlooked in the Contract, be sure to advise the attorney so that the missing items can be addressed in the approval letter. We’re here to help facilitate a smooth transaction for you and your clients. Your choice of words in the MLS Listing and Purchase Contract can do the same.
If you have a topic you’d like to see discussed in a future Newsletter, please send your ideas to us at: RelinQuarterly@rgcattys.com
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