Fixtures
A fixture is property that is a combination of real property and personal property. A fixture is something that could be removed from the real property, but is intended to be permanently placed even though it may not be permanently attached to the real estate. (see O.C.G.A. 44-1-6). For example, a ceiling fan is personal property until it is installed in a house. Once installed, it is considered a fixture, and becomes part of the real property.
In a residential real estate sale, fixtures usually remain with the property unless the seller disclosure indicates the seller is removing the fixture. A common example of a fixture that some sellers take with them is a chandelier. The standard Georgia Association of Realtor (GAR) seller disclosure form includes a list of fixtures (including chandeliers) that the seller plans on taking with them when they move out of the property.
For commercial property, the sales contract is usually very specific about what fixtures are staying with the property and what is being moved. A commercial buyer is buying the property for a specific business purpose, so it is important to know exactly what is included in the sale.
Fixtures are included in any residential security deed (a/k/a mortgage) and are part of the collateral that is encumbered with the mortgage. Fixtures are usually specifically encumbered in a commercial security deed as well.
Borrowers can use a fixture as collateral for a loan by itself. The lender would file a UCC fixture filing in the real estate records to secure their interest in the fixture as collateral for the loan.
Recently, we have seen more UCC fixture filings filed against residential fixtures. These UCC filings are often encumbering newly installed solar panels or an A/C unit. The UCC filing must be paid in full and satisfied prior to a sale or refinance of the property.
It is very important for buyers to know what fixtures are remaining with the property. Sellers must communicate and disclose everything being moved that could possibly be a fixture. Closings are much smoother when both parties have the same expectations about what property is being sold.
John C. Bennett is a real estate closing attorney and owner of Origin Title and Escrow, Inc.. Since 2003, Origin Title has handled real estate transactions – purchases, refinances, reverse mortgages – quickly and professionally. There will be no surprises, nothing misunderstood. Title searches are thorough and well-reasoned, to avoid unpleasant surprises later down the road. Calculate your closing costs in Georgia or Florida using our calculator or contact Origin Title using this form.