Component Parts: What's Included with the House or Building?
LOUISIANA REALTORS • November 13, 2018
By: Baker, Donelson, Bearman, Caldwell & Berkowitz, PC
Patricia B. McMurray
Buyers are often impressed by a property's features such as solar panels or a large porch. The house or building may also have beautiful light fixtures, commercial appliances or an outdoor kitchen with a grill. Which items the Seller is intending to sell and which items the Buyer is intending to purchase with the property is often a source of dispute and has led to litigation post-closing between Buyers and Sellers. Component parts of a house or building are transferred with the property. But what are the component parts of a house or building?
LOUISIANA LAW
Louisiana law provides a thing may become a component part of a building or house in three ways. First, by being incorporated into the building [1] (ex: the wood used for the door frames), by permanent attachment or items considered component parts by prevailing usage [2] (ex: drywall or shutters), or by written declaration of the owners. [3] Of these three types of component parts, items considered component parts of a house or building pursuant to "prevailing usage" are the most disputed because "prevailing usage" or what is typically considered a component part of a house or building may vary by region.
Component parts are defined in Article 466 of the Civil Code which provides:
Things that are attached to a building and that, according to prevailing usages, serve to complete a building of the same general type, without regard to its specific use, are its component parts. Component parts of this kind may include doors, shutters, gutters, and cabinetry, as well as plumbing, heating, cooling, electrical, and similar systems.
Things that are attached to a construction other than a building and that serve its principal use are its component parts.
Other things that are component parts of a building or other construction if they are attached to such a degree that cannot be removed without substantial damage to themselves or to the building or other construction. (emphasis supplied)
Article 466 provides guidance but does not specifically address all items which may or may not be included as component parts. If an item can be removed without substantial damage to the building it may still be a component part if society considers an item to be an integral part of a building or house.
In applying Articles 466, the Court will consider:
(a) whether the items could be removed without substantial damage to the house/building and
(b) if the item can be removed without substantial damage to the building, does prevailing usage generally consider these items to be an integral part of the house/building.
WHAT ARE SOME EXAMPLES OF TYPICAL COMPONENT PARTS OF A HOUSE?
Antique chandeliers physically connected to internal house wiring have been held to be "electrical installations" and thus component parts of a house [4]. This classification holds true even though the chandeliers could be removed without substantial damage to the chandeliers or to the house [5]. Examples of other installations "permanently attached" to a house as component parts include items such as built-in stoves or ovens, wall and ceiling electric heaters, central heating and air-conditioning, heat pumps, electrical hot water heaters, built-in public address and alarm systems, overhead fans, interior physically attached light fixtures, exterior lighting, automatic garage door controls, and like electrical equipment [6]. Septic tanks, field lines and air-conditioning cooling pipes have all been found to be component parts of a structure. [7]
Whether window coverings are considered component parts of a structure are often an issue. There are no Louisiana cases addressing the definition of "window coverings". The most recent reported court decision on any type of window covering as a component part of a house was in 1946 when Venetian blinds were in dispute. The Court found the Venetian blinds held in place by brackets attached to the window frames by screws were not component parts .[8] In the Kelieher case though, the agreement between the parties did not reference the transfer of "window covering" as does the Louisiana Agreement to Buy and Sell mandatory form so it is unclear if the result would be the same if this issue was again presented to the court. Window coverings might include blinds, drapes, shades, interior shutters or valances, according to prevailing usage in the region. Window coverings attached to the house and serving to complete the building or house may be considered component parts and transferred with the sale unless specifically excluded.
Doorbells and security systems have also been the source of dispute as to whether they are considered component parts of a house or building. Some "door bells" with security system features like video or audio recordings may be considered "security systems" by some people. There are no Louisiana cases on point on this issue. In In re: Joseph [9] the US Bankruptcy Court found one important consideration in finding the doorbell a component part of the home to be whether the home would otherwise have a doorbell without the exterior garden bell at issue in the case.
HOW ARE COMPONENT PARTS ADDRESSED IN THE LOUISIANA AGREEMENT TO BUY OR SELL (THE "AGREEMENT")?
Lines 10 through 18 of the standard Louisiana Residential Agreement to Buy or Sell (the “Agreement”) list many items which are typically included as component parts of a house. These items include:
all fences, security systems, all installed speakers or installed sound systems, all landscaping, all outside TV antennas, all satellite dishes, all installed and/or built-in appliances, all ceiling fans, all air conditioning or heating systems including window units, all bathroom mirrors, all window coverings, blinds and associated hardware, all shutters, all flooring, all carpeting, all cabinet tops, all cabinet knobs or handles, all doors, all door knobs or handles, all windows, all roofing, all electrical systems, and all installed lighting fixtures, chandeliers and associated hardware, other constructions permanently attached to the ground.
Unless these items are deleted in the Agreement from the items to be sold as a component part, they will be sold with the house. If the Buyer wants to make sure specific item is included as a component part of the house, the item should be listed in the blanks provided in lines 20 through 22 of the Agreement. If a Seller wants to make sure certain items are excluded from the sale, the items should be specifically listed in the blanks provided in lines 19 through 22 of the Agreement. For commercial transactions, a REALTOR® should consider specifically listing any valuable, potential movable items which may be questionable as component parts of the structure in the purchase agreement.
HOW CAN A REALTOR® ASSIST BUYERS AND SELLERS IN AVOIDING DISPUTES OVER DETERMINING WHAT CONSTITUTES COMPONENT PARTS OF A HOUSE OR BUILDING?
Disputes between a Buyer and Seller in a real estate transaction as to whether a particular item has been transferred by the sale of real estate are not uncommon. The Agreement explicitly includes in the property description, “all buildings, structures, component parts, and all installed, built-in, permanently attached improvements, …” Residential Agreement to Buy or Sell, Lines 10 – 11 (emphasis added). Lines 10 through 18 of the Agreement further describe the component parts of the property being sold. This listing of specific items provides an opportunity to discuss with buyers and sellers exactly what items will remain with the property being sold, and what items will be removed by the Seller from the property. Specifically setting forth in the Agreement any items located on the property that are important to the buyer, which will be transferred in the sale may eliminate later controversy and possible litigation. [10]
[1] LA C.C. Art. 465
[2] LA C.C. Art. 466
[3] LA C.C. Art. 467
[4] Equibank v. U.S. I.R.S., 749 F.2d 1176 (5th Cir. 1985). This case was heard before the amendment to LA C.C. Art. 466 but is still considered good law. See comments to LA. C.C. Art. 466.
[5] Id. at 1180.
[6] Id. at 1179.
[7] Lakeside National Bank of Lake Charles vs. Moreaux, 576 So 2d 1096 (LA Ct. App 3rd Cir 1991)
[8] See Kelieher v. Gravois, 26 So 2d 304 (1946).
[9] 450 B.R. 677 (Bankr. E.D. Mich 2011)
[10] See 1 La. Prac. Real Est. § 1:13 (2d ed).
Week 9 brought several major Louisiana REALTORS® priorities into posture as the Legislature moved deeper into the final stretch of the session. Two of our top priority bills, HB 468 and HB 1027 both by Representative Troy Hebert , cleared the Legislative Bureau and advanced to the Senate floor calendar for third reading and final passage. HB 468, our residential wholesaling regulation bill, remains one of the most important consumer protection measures of the session. The bill brings transparency, accountability, and clear rules of the road to residential real estate wholesaling in Louisiana. HB 468 previously passed the House by a vote of 96–0 and is now positioned for final Senate consideration. HB 1027, which clarifies that licensed real estate appraisers are not liable for a seller’s failure to comply with carbon monoxide detector requirements, also advanced to the Senate floor calendar after previously passing the House by a vote of 90–0. Both bills remain in strong posture, and Louisiana REALTORS® will continue working for final passage as they move through the Senate. Another major development this week was the House passage of HB 1166 by Representative Kim Carver , which passed unanimously on May 5, 103–0. HB 1166 creates a practical disclosure framework for vacant residential property transactions and is designed to help buyers, sellers and real estate professionals avoid late-stage surprises involving access, utilities, drainage, flood risk, prior use and other material property conditions. This bill has been a key part of Louisiana REALTORS®’ consumer protection and transactional clarity agenda. HB 1166 was received in the Senate on May 7 and now moves into the Senate side of the process, where Louisiana REALTORS® will continue working closely with the author and stakeholders as the bill advances. Tort reform and civil justice issues also moved forward this week. HB 437 by Representative Michael Melerine , which addresses the award of expert witness fees in civil litigation, passed the House by a vote of 75–18 and was received in the Senate on May 7. HB 1089 by Representative Dennis Bamburg Jr. , which creates structured CARE Accounts for certain categories of tort damages, passed the House by a vote of 67–29 and was also received in the Senate. Louisiana REALTORS® continue to support meaningful tort reform as part of the broader effort to improve Louisiana’s legal environment, reduce litigation-driven costs, and help stabilize the property insurance market. A more predictable civil justice system directly supports property owners, consumers, businesses and the long-term health of Louisiana’s real estate market. Property insurance remains one of the most important issues facing homeowners and property owners across the state. HB 1187 by Representative Paul Sawyer , dealing with Citizens Property Insurance emergency assessments, has been received in the Senate and referred to the Senate Insurance Committee after previously passing the House by a vote of 87–9. Several additional insurance-related measures remain active, including bills addressing fortified roof endorsements, stated-value homeowner policies, insurance notice requirements, nonrenewal restrictions, and pre-suit claim review. HB 408 , which addresses insurance nonrenewal prohibitions, and HB 1210 , which addresses mandatory pre-suit claim review, remain pending in the House Insurance Committee. Louisiana REALTORS® will continue to closely monitor these measures because insurance affordability, availability and market stability remain central to housing affordability and private property ownership in Louisiana. Several Senate bills also continued moving through the House processes this week. SB 241 by Senator Valarie Hodges , which requires insurance adjusters and appraisers to include their license numbers in written communications, cleared the Legislative Bureau on May 6 and returned to the House floor calendar. This measure remains relevant to transparency, accountability, and consumer confidence in the insurance claims process. SB 180 by Senator Franklin Foil , which allows surviving spouses of deceased disabled veterans to transfer their expanded property tax exemption, was scheduled for House floor debate this week and remains a positive homeowner protection and property tax fairness measure. Louisiana REALTORS® also continues to monitor legislation dealing with blight, redevelopment and rent stabilization. HB 284 by Representative John Wyble , which would authorize certain parishes and municipalities to expropriate blighted property by declaration of taking, remained on the House calendar this week as a notice-given, subject-to-call bill. The bill previously failed on the House floor by a narrow vote of 48–47 and remains under active reconsideration. Blight policy is important, but redevelopment tools must be balanced with private property rights, due process, and protections for property owners. HB 472 by Representative Alonzo Knox , which would authorize municipalities to implement rent stabilization programs, remains involuntarily deferred in committee. Louisiana REALTORS® continues to oppose rent control and rent stabilization proposals in any form because these policies reduce housing supply, discourage investment, and ultimately worsen affordability challenges over time. As we move into Week 10, Louisiana REALTORS® will remain focused on securing final Senate passage of HB 468 and HB 1027, advancing HB 1166 through the Senate, and continuing to engage on the tort reform and insurance measures that directly affect property owners, housing affordability and the real estate profession. With REALTOR® Day at the Capitol taking place during this critical stretch of the session, member engagement will be especially important as legislators continue to make decisions on real estate, insurance, liability, redevelopment and private property rights issues. Please view the weekly bill tracking report provided by our lobbying team over at Harris, DeVille and Associates.
Week 8 was one of the most consequential weeks of the session so far for Louisiana REALTORS® and the real estate industry. Two of the association’s flagship bills moved to the brink of final Senate action, rent stabilization was stopped again in committee, major insurance legislation continued to advance, and several bills affecting property rights, tort reform and transaction practice saw meaningful movement. The biggest developments of the week came on HB 468 and HB 1027 , both by Rep. Troy Hebert . HB 468 , the residential wholesaling bill, cleared the Senate Commerce Committee on April 28, had its amendments adopted on April 29, and was referred to the Legislative Bureau putting it one step away from the Senate floor. HB 1027 , the appraiser liability bill, followed the same path after its overwhelming House passage earlier this month and is also now pending Legislative Bureau review before final Senate consideration. Louisiana REALTORS® strongly supports both measures, which are designed to strengthen consumer protection, improve market clarity and reinforce confidence in the real estate transaction process. On the rent-control front, HB 472 by Rep. Alonzo Knox was brought back before the House Municipal, Local and Parochial Affairs Committee this week. Louisiana REALTORS® testified in opposition, and the committee voted 8-5 to defer the bill involuntarily. That is a meaningful win for property owners, housing providers, and the long-term health of Louisiana’s housing market. Louisiana REALTORS® remains firmly opposed to rent stabilization proposals, which may sound politically attractive, but have consistently been tied to reduced housing supply, deterioration in rental stock and long-term affordability problems in markets where they are adopted. Insurance remained one of the session’s most active and important policy areas. HB 1187, Rep. Paul Sawyer , dealing with Louisiana Citizens for emergency assessments, passed the full House 87-9 on April 29, and now heads to the Senate. Because Citizens' assessments can ultimately affect policyholders across the state, this bill has clear relevance for affordability and homeownership costs. HB 408, Rep. Edmond Jordan was heard in House Insurance Committee this week and remains pending. This bill would prohibit insurers from non-renewing residential policies when homeowners have taken documented steps to reduce risk, an issue with direct implications for insurability and failed closings in vulnerable markets. In addition, SB 241 by Sen. Valarie Hodges , which requires insurance adjusters and appraisers to include their license numbers in written communications, cleared House Insurance unanimously and is now headed to the House floor. Taken together, these measures reflect the legislature’s continued focus on insurance stability, transparency and accountability, all of which remain central to real estate activity in Louisiana. Week 8 also brought movement on broader tort reform and property-rights-related legislation. HB 437 , addressing expert witness fees, and HB 1089 , creating structured CARE Accounts for tort damages, both cleared House Civil Law and are now set for House floor debate next week. Meanwhile, SB 180 by Sen. Franklin Foil , allowing surviving spouses of disabled veterans to transfer a property tax exemption, is nearing final House passage after advancing to third reading. While not all of these bills directly regulate licensees, they reflect the broader civil liability and property tax environment that affects the cost and accessibility of owning property in Louisiana. Another key bill for the industry, HB 1166 by Rep. Kim Carver , remains very much alive and is now positioned for House floor debate on Tuesday, May 5 . The bill would require disclosures for vacant residential property, and it would close an existing gap in Louisiana law that currently exempts many vacant homes from standard seller disclosure rules. After being called and returned to the calendar earlier in the week, the bill is now finally set for debate. Louisiana REALTORS® also intends to use the bill as a vehicle for a structural amendment to the Louisiana Real Estate Commission that would move toward a more geographically balanced appointment process, with one member appointed from each congressional district and the remaining members appointed at large. That change would better ensure regional representation across Louisiana’s diverse real estate markets and help modernize the commission’s structure. Taken together, week 8 was a strong and consequential week for Louisiana REALTORS®. The association’s two flagship bills are now within reach of Senate floor passage, rent stabilization was turned back in committee, important insurance legislation continued moving, and HB 1166 remains positioned as both a major disclosure bill and a possible vehicle for meaningful LREC reform. Louisiana REALTORS® remains fully engaged at every stage of the process to protect private property rights, support practical regulation and advance policies that strengthen Louisiana’s real estate market. Lastly, this week, Louisiana REALTORS® wants to extend sincere thanks to Rep. Delisha Boyd — a real estate broker herself — for her tireless work shepherding HB 292 through the legislative process. The security deposit fairness bill, which allows landlords and tenants to mutually agree in writing to extend the timeline for returning a security deposit when damage is found, has passed to third reading and final passage in the Senate and is nearly on its way to the Governor's desk. This has been a meaningful win for both property owners and renters across Louisiana. Please view the weekly bill tracking report provided by our lobbying team over at Harris, DeVille and Associates.
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