How do you determine if an item is “permanently installed and built-in” with regard to Paragraph 2 of the One to Four Family Residential Contract (Resale) (TXR 1601, TREC 20-16)?
Whether an item of personal property has been so permanently attached as to constitute realty is a question of fact. Juries consider three factors when determining whether personal property has become real property:
- Will the property be damaged by removal? If so, to what extent? (This question determines the mode and sufficiency of attachment.)
- Is the item customized for the property, or is it standard? (This determines the adaptation of the item to the use of purpose of the realty.)
- Was the installation intended to be permanent or temporary? (This question addresses the intention of the party who attached the item to the realty.)
The party’s intention is the predominant factor, while the first two factors constitute evidence of that intention. Testimony of intention will not prevail, however, in the face of undisputed evidence to the contrary. [Logan vs. Mullis, 686 S.W.2d 605, 607 (Tex. 1985)]
If you don’t know if something is permanently installed and built in, but you do know your client wants to keep or convey it, put it in writing. Include the seller’s intentions in the exclusions provision in Paragraph 2 if the seller wants to keep the item or attach a non-realty items addendum to the contract if the buyer wants the item conveyed so the buyer receives it with the property at closing.
Source: Texas REALTOR® Magazine