Mortgage | What_the_chattel

What the chattel

What the chattel

When you are selling or buying a home, you inadvertently come across chattels in the purchase and sale agreement. Chattels can complicate a purchase or sale depending on the agreement and how it is set out by the REALTOR®.

What is a chattel?

A chattel is defined as any item in the home that is not affixed to the property itself. This can be anything from artwork to appliances or even window coverings.

What is a fixture?

Fixtures differentiate from chattels because fixtures are attached to the property and cannot be moved or taken.

Examples:

A piece of art is hanging on the wall in the hallway of the home – this can be easily removed and is not affixed to the property, this would classify as a chattel. A light fixture is mounted on the wall in the hallway of the home – this would be classified as a fixture as it is not easily removed from the home and is permanent improvement of the property.

Why does it matter?

When you have the written purchase agreement a common mistake is when a price is given to the chattel. In terms of a mortgage, any item listed in the purchase agreement should be included in the purchase price. Mortgage lenders only lend funds on the property, not any personal items.

Example:

If the purchase agreement listed the buyer would pay $3,500 for art already in the home. Mortgage lenders would not lend on this amount and would expect the home owner to pay for this. Where this can differ, is if the purchase agreement was written in a way that the art is included in the home. One common case is having appliances wrapped up in the price of the property. It’s important to know that the purchase price of the property cannot be inflated to accommodate these additions. Lenders will still only lend on what is considered fair market value of the property, typically done by means of an appraisal. When in doubt it is always recommended to discuss any item that you would want included in the home purchase or sale such as appliances, window covers, or any other item not affixed with your REALTOR®.

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