It continues to be a seller’s market. Home prices are rising and rates are still at historic lows. As I’m thinking about real estate and trying to help folks get what they expect out of a transaction, it occurred to me that one area that can cause a lot of heartache is confusion about real versus personal property.
Real property is real estate—the land, the structure, and whatever is permanently attached. Personal property is anything you can pick up and walk away with. Now, if this were really as simple as I’ve described, I’d be writing a very short column. The confusion occurs in the gray area between the two.
For example, an in-ground swimming pool is real property. A doughboy swimming pool is personal property. A custom built hutch that fits perfectly in an alcove and looks attached is only real property if it is attached to the house. Plants in a garden are real property, unless they are in pots that can be carried away—then they’re personal property. A hose affixed with a clamp that is part of an irrigation system is real property, but a garden hose that screws onto a spigot is personal property. Windows are real property; the tailor made window treatments are personal.
Why does this matter? When you buy or sell a home, real property is automatically included in the transaction. Personal property is not. Purchase agreements must explicitly name any personal property for it to be included in the purchase. If the house has an in-ground pool, be sure your offer says, “…includes all swimming pool equipment.” If the listing agreement outlines what is included, your offer can refer to that agreement with a statement like, “includes all personal property specified in listing agreement.” If there is ANY question, spell it out. The hot tub looks permanent, but it isn’t. Now is not the time to save on paper.
While I’m thinking about it, you should also make sure you’re getting the real property you mean to purchase. Go back and read that Preliminary Title Report. It includes things like the owner’s name, any liens on the property, and the assessor’s parcel number. Double-check the title of the property and the location. If you are buying more than one parcel, make sure they are both listed on the offer! Talk to your REALTOR and/or title company representative about the legal description.
If you’re not sure about the boundary lines on a property, you can always hire a surveyor. This is rarely needed, but if you’re buying a ranch, for example, and there’s a dispute about whether the well is on your side of the property line or your neighbor’s, you need to know.
As long as you are working with a competent realtor, you should be fine. Just follow these guidelines: understand the difference between real and personal property and make sure your purchase agreement lists the entire property for sale and is explicit about any personal property to be included.
Next time I’ll write about ways to make your home more energy efficient. If there’s something you’d like me to write about or if you have questions about real estate or property management, feel free to contact me at firstname.lastname@example.org or visit our website at www.realtyworldselzer.com. Dick Selzer is a real estate broker who’s been in the business for more than 30 years.