Possible Scenario When Selling Land

What Does The Contract Provide?

The best possible scenario when selling land is for the sale contract to refer to a list of items as being included or excluded. In residential transactions, the seller usually completes a fittings and contents form and a specimen form TA10 can be found on the Law Society website.

The seller lists those items remaining at the property as well as those that will be removed. In addition to referring to the list, the contract will state whether any part of the purchase price will be allocated towards buying the fittings. A buyer pays no stamp duty land tax on these items, only on the part of the price payable for the property itself.

The deposit is, however, usually payable as a percentage of the property price together with any sum being paid for fittings.

The buyer’s solicitor should send the form to their client to check before exchange so that any discrepancies can be raised and resolved.

What If The Contract Is Silent?

If the sale contract does not state whether an item is included or excluded, it is necessary to decide if it is a fixture or a fitting. The seller cannot remove any fixtures in place at the time of exchange.

Case law has established that two tests need to be applied. The first asks: what is the method and degree of annexation?

Historically, a great deal of importance was given to this test. In D’Eyncourt v Gregory [1866] LR 3 Eq 382, the court decided that any item fixed to land other than by its own weight is, prima facie, a fixture.

A conclusion is more likely to be reached if the second test is applied, namely: what is the object and purpose of annexation?

An item is a fitting if there is no intention that it should form part of the property, having taking into account the nature of the object and the reason for it being placed there.

Case law offers further guidance on these points and the following should be considered:

Intention

If the seller intended for the item to be included in the sale, it is more likely to be a fitting. This was the case in Leigh v Taylor [1902] AC 157, where tapestries were tacked to wooden frames; the frames then being nailed to the walls of the building. When the frames were removed, no structural damage was caused and the court held that the items were fittings.

Any intentions of the parties raised in negotiations or reflected in estate agent’s particulars will also be considered. In Hamp v Bygrave [1982] 266 EG 720, free standing garden urns and ornaments (which included a statue) were held to be fixtures for this reason.

Likelihood Of Damage On Removal

In Berkley v Poulett [1976] 241 EG 911, the court held that the extent of any physical damage caused by the removal of the item must be taken into account. If an item can only be removed by causing serious damage to or destruction of part of the property then it is more likely to be a fixture.

Overall Architectural Design

Freestanding stone statues, seats and garden vases were all held to be fixtures in D’Eyncourt v Gregory [1876] 3 Ch D 635 as they formed part of the overall design of the house and its garden.

Common Sense

Elitestone v Morris [1997] 1 WLR 687 involved a chalet bungalow that was placed on concrete blocks that were in turn attached to the land. The House of Lords had to consider whether the bungalow itself was part of the land upon which it stood. Fortunately, they emphasised that with a house the answer depended as much on common sense as it did on precise analysis. As removal of the bungalow would have led to its destruction it had to be a fixture.

When acting for either buyers or sellers, the question of fixtures and fittings must be raised. The contract should expressly deal with:

• fixtures which the seller will remove from the property on or before completion, including provision for any damage caused to be made good by the seller;
• fittings which will be remaining at the property after completion with a warranty that the items are free from any incumbrances;
• allocation of the purchase price for any items remaining to ensure that they do not form part of the buyer’s stamp duty land tax liability; and
• postponing passing of title to any items until completion.

On completion, the seller must also make sure that all goods and rubbish have been removed from the property. The test as set out by the Court of Appeal in Cumberland Consolidated Holdings v Ireland [1946] 1 All ER 284 is whether the items left substantially interfere with the enjoyment of a large part of the property. The contract should require the seller to remove all fittings and rubbish on or before completion.