Feb. 13, 2006
Dear George: In a Texas Association of REALTORS® commercial contract (improved property) transaction, would a stove and refrigerator be considered "fixtures" or "personal property"? Neither the stove nor the refrigerator are built in or attached in any fashion.
Answer: A fixture is an item of personal property that has been attached to real estate such that it becomes real estate, and a purchaser would expect that item to go with title to the real estate. The tests for a fixture involve how it is affixed, how it is adapted to the real estate (was it installed uniquely for these premises and wouldn't fit in another?), and intent. Intent is the most important factor. Title to real estate passes by deed, title to personal property passes by bill of sale. Since intent is the pre-eminent test, parties should eliminate any doubt by either stating an exception to those items as going with the property, or by including them as items that will pass to the buyer by bill of sale at the closing. Other than the above definitions, we cannot answer your question with any degree of certainty because you have not identified what the principals to the transaction intended for the refrigerator and the stove to be. They might be part of the real estate if the contract stated that they were, or they could be personal property that is either to be conveyed by a bill of sale to the purchaser or that does not convey to the purchaser but instead goes with the seller. What does the contract state?
Dear George: Regarding your previously published answer about not having to provide earnest money in order for the offer to become a contract, if there is no earnest money and if there is no option money, then there is no consideration. Is it still a valid contract?
Answer: Even without earnest money and without an option fee, the written contract itself is regarded as "consideration" because it refers to that thing or right that a party gives up in order to induce another (i.e., both parties to the transaction) to enter into a contract. Money is not the only type of consideration applicable to contract law.
Dear George: What happens when you decide to go with a different mortgage company from the one required by the builder if the builder is going to provide builder incentives to you as a buyer?
Answer: Let's say, for example, a purchaser of a new construction home from a builder wants to see what his lender, ABC Lending, can offer for interest rates, terms, etc. The purchaser's problem is that if he uses ABC Lending instead of the builder's recommended lender, XYZ Lending, then the purchaser will not receive the builder's incentive package. Let's say that the builder will pay the purchaser's title insurance policy, which for this home will be $1,200. Let's also say that in all other respects, the good faith estimates received by the purchaser from ABC Lending and XYZ Lending are exactly the same, except that the estimated cost for title insurance from XYZ Lending is $0, compared to is $1,200 from ABC Lending.
Provided appropriate disclosures are made to the purchaser, in order to compete as to total costs involving the loan, ABC Lending would have to reduce its costs to the purchaser. However, there are many other factors to consider, such as dependability and reliability of the lender's loan officer with whom the purchaser is dealing. The bottom line, however, is that if the purchaser wants the builder's incentives, the purchaser must use the builder's lender or get the purchaser's lender to reduce its fees to the same amount as the builder's lender.
Dear George: I am being presented with Texas Association of REALTORS® form 1101 by agents offering to list my house for sale. On page 2, Section 3,the form states: "Seller will pay all typical closing costs charged to sellers of residential real estate in Texas (seller's typical closing costs are those set forth in the residential contract forms promulgated by the Texas Real Estate Commission)." Where can I find the documents that this contract is referring to?
Answer: Go to the Forms page of the Texas Real Estate Commission's Web site and select 20-6 One to Four Family Residential Contract (Resale). In Paragraph 12, the form lists in those items referred to in the TAR listing agreement. Take special note of the wording in 12A(1)(a) that states: "… other expenses payable by Seller under this contract." That means one must read the entire contract offer from a purchaser to determine what other expenses and/or costs the seller is being asked or is required to pay.
E-mail a question to ask George & Chuck or fax it to 713-978-6684. The answers to questions in this column do not contain legal advice. If you wish to obtain legal advice, you should consult your own attorney.