Personal Property

Although the legal definition of real estate applies to land and buildings, it does not necessarily include the personal property that may form part of your agreement with the sellers. (Generally, the term "personal property" refers to items that are not "permanently" attached to a building or the land.) Say the sellers of a fourplex provide their tenants window air conditioners, miniblinds, ranges, refrigerators, and ceiling fans. If you offer to buy that property, expressly list these items in your written purchase contract.

While it's true that many courts have broadened the concept of real estate to include personal property that is "adapted for use" with a specific property, you definitely do not want to depend on litigation to force the sellers to convey the personal property that you believed to be included in the sale. Leave no doubt—write it out. Go through every room of the property and list every item that the sellers might plausibly maintain was not a part of your agreement because it was their "personal property" and therefore not included with the sale of the real estate.

This listing of personal property serves another purpose, as well. It requires the sellers to clearly point out what personal property belongs to them and what belongs to their tenants. Property investors who do not obtain an accurate list of the seller's personal property may later find themselves in dispute with tenants when the tenants claim, "That refrigerator is ours. That junk icebox the landlord provided was carted off to the dump two years ago. We bought this refrigerator from Betty's parents." To be doubly safe, at the time you buy, ask the tenants to sign off on any list of personal property that the sellers prepare.

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