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Understanding the Distinction Between Chattels and Fixtures
Kormans LLP
June 15, 2023
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In the realm of property law, it is essential to differentiate between chattels and fixtures, as they hold distinct legal implications. Ontario, like many other jurisdictions, recognizes the importance of this distinction when determining ownership rights, contractual obligations, and the transfer of property.
Chattels refer to moveable personal property that can be physically possessed and transported. They are generally characterized as items that are not permanently affixed to the land or structures on it. Examples of chattels include furniture, electronics, artwork, and vehicles.
Fixtures are items that are permanently attached or affixed to the land or structures. Fixtures are inherently connected to the property in such a way that their removal would cause damage or alteration. Examples of fixtures include built-in appliances, lighting fixtures, heating systems, and installed cabinets.
Not all items fit squarely within one category or the other. For more ambiguous items, there is no single factor that is conclusive, rather, courts analyze the circumstances as a whole.
One important legal implication of the distinction between chattels and fixtures relates to the transfer of real property under an agreement of purchase and sale (APS). Fixtures become part of the property and are transferred with it unless explicitly excluded from the sale in the APS. On the other hand, chattels are deemed not to be included in the sale of real property, unless explicitly included in the APS.
Another legal implication involves the security interests of lenders. Chattels, and fixtures (forming part of real property), are subject to different registration systems when they are involved in a security interest, and consequently, different legislation and rules apply to them in this context.
Understanding the distinction between chattels and fixtures is crucial for property owners, buyers, and sellers. When it comes to agreements of purchase and sale for real property, the starting point and default position is that chattels are excluded, whilst fixtures are included. For any items which may be subject to ambiguity and conflict, or for any intended deviation from the default assumption as described above, it would be prudent for sellers and buyers to explicitly set out their intentions in the APS. This reduces the likelihood of misunderstandings, and conflicts arising after the fact.
If you have any legal questions regarding this topic, please do not hesitate to contact us at (905) 270-6660 or e-mail us at: Info@kormans.ca.
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