Do fixtures/appliances in a tenant-occupied TS belong to the new owner?


#1

We have recently bought a tenant-occupied building. The management company is billing us for the stove, refrigerator, beds, garage openers and other furnitures. We believe the previous owner may have paid for them. Do these items belong to the new owner from the trustee sale? Would the answer be different if the property was vacant?


#2

That is a really good question and a very peculiar situation. I actually had to read the scenario a few times. If the property was vacant you would own it with whatever was in the unit in terms of appliances.
In my experience management companies do not purchase and own appliances or other fixtures. Typically these items are owned by the owner of the property unless they are items that belong to the tenant. (Example, they unit may be rented without a refrigerator). That said you did mention beds which may mean that the units were rented as furnished?? I find it highly unlikely that the management company owns these items and I think I would try to talk to the tenants to find out what was included in their rental agreement. I would also ask the management company for proof that they own these items. Possibly a management agreement?? This appears to me to be very suspicious.


#3

What if the management company had owned the property and sold it to the previous owner?
The units are leased partially furnished.


#4

If they sold the property to the previous owner it is doubtful that they would have retained ownership of the fixtures and other personal property. (Mattresses would be considered personal property). This is a really unique situation. It sounds like you need to put your own management in place and take control of the property as soon as possible. You can consult with an attorney on this matter but based on what you have said I do not think you owe them anything.


#5

Do you know what code deals with items inside a property purchased at a Trustee Sale?

Thank you.


#6

This is fundamentally a real property VS personal property issue. If you can show that the furnishings were included in the last sale, the replacements purchased by the managment company duing the course of renting the units would be maintenance. I would look for MLS listings. The information on what is included in the previous sale might be there. Then, it could be argued that it was part of the financing and attached.


#7

What if MLS information is unavailable, or the property was not put on the MLS prior to TS? Is there code language pertaining to these items?


#8

HI Oliver, That information can be found in CA Foreclosure Law - Civil Code 2924. A complete overview of that code can be found under the Learning Center Tab-Foreclosure Laws. Personal property disposition starts with a Notice of Belief of Abandonment and ends with a an auction. It is recommended that you give an 18 day notice when not personal served (posted to the property). The personal property should be inventoried, photographed or videotaped. It can be stored at a storage facility. If the property is reclaimed you are entitled to payment of storage fees and costs. If not reclaimed then you would publish the sale date and sell the items at a public auction. The whole process takes approximately 33 days.


#9

Hi Oliver, In most cases a buyer will negotiate the price of the real property and the personal property separately. This is usually done to avoid having the price of the personal property affect the property tax assessment and increase the tax base. If personal property is included in the sales price the PCOR (Preliminary change of ownership form) that is filed with the grant deed has a place to disclose this information. You may want to look at the last sales price and the tax assessment records to see if there was a lower tax assessment than the previous sale. This could be a clue that there was personal property included in the sale. If that doesn’t work then sometimes the neighbors can be your greatest source of information. Because the sales price of a home can both positively and negatively impact the value of their property they are usually on top of the information when it comes to an inflated or deflated price. In my neighborhood a property sold for 100k over what is shown in public records because they purchased it furnished. All of the neighbors know the total amount they paid.


#10

The “common” way of determining whether an item is part of the real property or “personal property” is:
Is the item permanently attached. Eg. I light fixture wired into the ceiling (real), free standing light (personal). Built-in cook top or oven (real) ; free standing range, (personal) - A refrigerator is normally personal property.
The gray area is who does the refrigerator and other “non-real property” belong to if it looks like it was abandoned? In there very rare instance there is lots of personal property of some value left behind - you then have to publish a sale notice to sell off the personal property.
Nothing is black and white.