Can a homeowner take the kitchen appliances upon foreclosure?
Depending on which side of the auction bid you are on, a foreclosure can represent either one of the most stressful moments in a homeowner's life or a good investment opportunity for the highest bidder. Though the foreclosure mainly impacts ownership of the real property, it may also affect the homeowner's claim to the refrigerator, stove, or washing machine. Understanding when an appliance becomes a fixture of the house can provide homeowners and real estate investors a framework to negotiate a settlement agreement between the previous and new homeowners.
According to most deeds of trust, the real property to be purchased serves as collateral for the mortgage loan, together with all the improvements, easements, appurtenances, and fixtures. The word appliances are usually not included in the text of the deed of trust; that is because the appliances that come with the real property are treated as fixtures.
According to the Uniform Commercial Code, a fixture means a good that has become so related to a particular real property that an interest in them arises under real property law. Even items that are moveable and not built in, like a dishwasher, could be considered a fixture.
In the District of Columbia and Virginia, courts will consider multiple factors to determine whether an appliance is a fixture, but the most important factor is the intention that the appliance should be a permanent accession to the realty.
A court might infer intention from the nature of the article affixed, the purpose for which it was affixed, the relationship of the party making the annexation or the structure and mode of annexation. If the appliance is essential to the purposes for which the building is used or occupied, it will be considered a fixture.
Under this framework, the refrigerator, stove, microwave, and dishwasher that came with the house are fixtures because without them, the kitchen in the property would not serve its purpose. Should a homeowner take those appliances with them after a foreclosure sale, they could be held liable for conversion.
When homeowners invest their hard-earned dollars into upgrading kitchen appliances, they may want to consider the amount left to be paid in the mortgage and the likelihood of defaulting on the mortgage loan. One action homeowners can take is to notify their lender of their claim to the new appliances. Since intention is such an important factor in determining if an appliance is a fixture, documenting the purchase of a new appliance and the desire to exclude it from the rest of the house could be a wise move. That being said, a homeowner should contact a real estate attorney to discuss their options to avoid foreclosure and/or to mitigate the impact of the foreclosure.