A fixture is an item such as a toilet that was once personal property but has become so “affixed” to real estate that it is no longer considered personal property but rather a part of the real estate. So why does it matter how you classify it? Because if you classify it wrong, it could cost you money. Here are some examples:



(1) Eminent Domain

If the government takes your property for public purposes, it is obliged to pay your just compensation. However, they will compensate you only for your real property, not your personal property. So if it's gonna cost you more than the item is worth to remove it from your real estate but the government nevertheless classifies it as personal property, you might as well leave it there and take the loss.

(2) Property Taxes

Real estate and personal property are taxed at different rates in many jurisdictions (and serious misclassification of your property can get you nailed for tax evasion if it lowers your overall tax bill).

(3) Sale of Real Estate

If you sell your real estate with a real estate sales contract, the buyer gets your real estate but not your personal property. You'd better clarify this in your contract or a dispute is likely.

(4) Mortgages

Most mortgages cover the subject real estate along with all “after acquired” real property. So if you bolt down an expensive fixture and the bank later forecloses on your mortgage, it will matter whether it's classified as a fixture or not.

(5)Inheritance

If your rich uncle leaves his real estate to his son and his personal property to you, fixtures will go to his son, not you.

Please refer to my previous article on fixtures for a list of the factors courts use to determine whether a particular item is a fixture or not.