• Siv
• 11-Sep-2024

There are certain legal terms which one must understand while buying or selling a property. “Chattels” is one such term which often crops up in real estate deals. It is important to understand what chattels are and how they differ from fixtures.    

This blog is your comprehensive guide to understanding the concept of chattels in real estate, why they matter, and how they are handled in Canadian property transactions.    

What Are Chattels- here is the answer that explains it all

When discussing or delving in real estate, chattels refer to personal property that is movable and not permanently attached to the land or buildings. As you get some idea from this definition, chattels are distinct from real property. Real property includes land and anything permanently attached to it, such as buildings or fixtures.

 

Examples of chattels include:

• Furniture: like sofas, chairs, tables, and beds.
• Appliances: like refrigerators, microwaves, washing machines, and dryers.
• Electronics: like televisions, sound systems, and computers.
• Decor items: like curtains, rugs, mirrors(if not affixed to the wall), and decorative items.
• Personal belongings: like clothing, books, and jewelry.
• Vehicles: like cars, motorcycles, boats, and bicycles./li>

These are just a few examples of what things are counted as chattels. Then there are items like plumbing fixtures, electric fixtures, built-in appliances, built-in shelving, flooring, permanent structures, etc, which are not considered chattels. As there can be grey areas where it is not immediately clear whether it is a chattel or a fixture, proper documentation and legal advice from the experts becomes critical.

 

To be precise, the major characteristic of chattels is that these are things which can be easily removed without causing any damage to the property. It is this mobility which distinguishes them from fixtures (which are considered part of the property itself).

 

Chattels vs. Fixtures: some key differences

It is but natural to get confused between chattels and fixtures while making real estate transactions. The best way forward is always getting legal experts to sort it for you. But you too need to have a fair understanding so that you understand the distinction between these two terms. In simple words, chattels in real estate are those items and things which are movable and fixtures are items that have been permanently attached to the property. Fixtures are thus a part of real estate.

 

To help you get more clarity on chattels, let us also now take a look at some common example of fixtures so that you don't confuse the two:

 

• Built-in Appliances: Ovens, dishwashers, and stoves that are integrated into the kitchen.
• Lighting: Chandeliers and ceiling fans that are hardwired into the electrical system.
• Plumbing: Sinks, toilets, bathtubs and other plumbing fixtures.
• Structural Elements: Built-in bookshelves, fixed cabinets, and countertops.

 

When we talk about chattels, we also talk about fixtures because that helps you determine what is included in the sale of the property.

Unless excluded by the sales agreement, fixtures are generally included in the sale. Chattels, on the other hand, are not included unless explicitly stated in the contract. This again shows why legal expertise should be sought to frame a contract.

 

Why Are Chattels Important in Real Estate Transactions?

Understanding what constitutes chattels is essential for both buyers and sellers for several reasons:

1. For avoiding disputes: identifying what are chattels and what are fixtures in the purchase agreement help avoid disputes between buyers and sellers. For example, if a seller takes a refrigerator that the buyer believed was included, this could lead to legal conflicts. This is easily avoided by specifying what is included in the sale.
2. Property Valuation: Value of a property can be affected by inclusion or exclusion of certain chattels. A furnished home with high end appliances will certainly command a higher price compared to one which does not include such appliances. Buyers need to consider all these aspects when making an offer.
3. Financing Considerations: Buyers may have to arrange separate financing or pay from their pockets for the chattels included in the sale. The reason is that lenders generally finance real property and not personal property.
4. Legal Compliance: In Canada, real estate transactions are governed by provincial laws. Different provinces may have different requirements for documenting chattels. Ensuring compliance with these laws is important for a legally binding transaction.

 

How Are Chattels Handled in Canadian Real Estate Transactions?

In Canadian real estate transactions, chattels are typically handled as follows:

1. Purchase Agreement: The Agreement of Purchase and Sale (APS) should clearly list any chattels included in the sale and specify any chattels that are not included.
2. Offer Process: Buyers and sellers can negotiate on inclusion or exclusion of chattels during the offer process.
3. Inspections and Walkthroughs:  Buyers need to inspect the property and the chattels (when included) thoroughly.
4. Closing the Sale: When closing the deal, both parties should review final documents. At this stage, any issues should be resolved and then the transaction should be completed.
5. Dispute Resolution: Canadian courts will refer to the purchase agreement in case of disputes which is why you need legal advice while making transactions.

 

Practical Tips for Buyers and Sellers

There are some tips, which can help both buyers and sellers, for ensuring chattels are handled smoothly in your transaction. The following tips can help you avoid any conflicts, making the right valuation, and to figure out financing without any hiccups:

• Prepare a Detailed List: Sellers should prepare a comprehensive list of chattels they will be including or excluding from the sale. Make sure that the list is attached to the purchase agreement.
• Conduct a Thorough Inspection: Buyers should inspect the property thoroughly and verify the condition of chattels if included. Any issues need to be addressed before finalising the sale.
• Consult with a Lawyer: As you already know that there can be certain grey areas and some legal complexities around chattels, you should always consult a real estate lawyer. Houseclosing provides you with the best experts to draft clear agreements, review drafts, and ensure that your rights are protected throughout the transaction.
• Be Transparent: Both parties (buyers and sellers) should be transparent and openly communicate their expectations.

 

Conclusion

It is evident that chattels are an integral part of real estate transactions. Understanding their role will help you navigate the buying or selling process more effectively. In Canada, where real estate laws can vary by province, clarity and precision in handling chattels become necessary whether you are a buyer or a seller.

 

There are certain grey areas and sometimes it can be difficult to differentiate what are chattels in real estate and what are fixtures. Thus, it becomes crucial for both buyers and sellers to document what is included in the sale within the purchase agreement. This avoids disputes and ensures that both parties have a mutual understanding of what is being transferred. This is why you need a professional real estate lawyer who can provide personalised advice and guide you through the complexities of your real estate transaction. At Houseclosing, we have the best experts to help you with smooth transactions and deals.