Volume 7 - Opinions of Counsel SBEA No. 59
Sales reporting (full sales price) (personal property) – Real Property Tax Law, § 574; 9 NYCRR 191.2:
If a sale of real property includes personal property which exceeds $500 in value, the value of the personal property must be entered on the Real Property Transfer Report (EA-5217). The question of whether an item is real property or personal property must be decided on a case by case basis.
We have been asked to clarify the definition of personal property for purposes of the EA-5217 Real Property Transfer Report Form, and to set forth guidelines for completing the Form when a sale of real property includes personal property.
Section 331(1-e) of the Real Property Law, as amended by Chapter 751 of the Laws of 1980, requires that any conveyance submitted to a recording officer be accompanied by a transfer report form prescribed by the State Board of Equalization and Assessment. The State Board has prescribed the Form EA-5217 (9 NYCRR 191.2).
The State Board rules require that the value of personal property in excess of $500 be entered on the EA-5217 Form. This requires the person filling out the Form to estimate the value of the personal property to the best of his ability. On the Form, the value of the personal property (if in excess of $500) is to be subtracted from the amount of “cash consideration” and “assumed mortgage” to arrive at a “full sales price” for the property. “Full sales price” as defined in section 333(1-e) of the Real Property Law specifically excludes the value of personal property received by the buyer. The rationale is that the inclusion of the value of personal property in the “full sales price” will not give a true indication of the fair market value of the real property.
Real property, as defined in section 40 of the General Construction Law “includes real estate, lands, tenements and hereditaments, corporeal and incorporeal”. Personal property is defined by section 39 of the General Construction Law as including:
chattels, money, thins in action, and all written instruments themselves, as distinguished from the rights or interests to which they relate, by which any right, interest, lien or encumbrance in, to or upon property, or any debt or financial obligation is created, acknowledged, evidenced, transferred, discharged or defeated, wholly, or in part, and everything, except real property, which may be the subject of ownership. (Emphasis added).
Thus, it may be said that all property which is not real property is personal property.
Section 102(12) of the Real Property Tax Law defines real property for the purposes of taxation. Subdivision 12 is divided into paragraphs (a-h) containing both a general definition and addressing several specific situations. Basically, “land itself” and “buildings and other articles and structures, substructures and superstructures erected upon, under or above the land...” are real property for purposes of taxation.
With respect to situations or items not specifically covered by section 102(12), the question of whether a given item is real property must be determined on a case by case basis. Although there is no inflexible rule to follow in deciding, the courts have considered the three following requisites: (1) degree and character of annexation to real property; (2) adaptation to the use or purpose to which that part of the realty with which it is connected is appropriated; and, most importantly, (3) intention to make the annexation of the item to the real property permanent. These requisites were discussed in the early landmark case of People ex rel. National Starch Mfg. Co. v. Waldron, 26 App.Div. 527, 50 N.Y.S. 523 (2d Dept., 1898), and later case holdings have not altered this approach.
Generally, domestic furnishings and appliances are held to be personal property and not fixtures. For example, the following items have been held to be personal: carpets (Cosgrove v. Troescher, 62 App.Div. 123, 70 N.Y.S. 762 (1st Dept., 1901)); curtains (Walker v. Sherman, 20 Wend. 636 (S.Ct., 1839)); paintings (In re Speyer’s Will, n.o.r., 35 N.Y.S.2d 705 (Surr. Ct., Westchester Co., 1942); stoves (Freeland v. Southworth, 24 Wend. 191 (S.Ct., 1840)); cooking ranges (ALF Holding Corp. v. American Stove Co., 253 N.Y. 450, 171 N.E. 703 (1930)); and domestic refrigerators (Chasnov v. Marlane Holding Corp., Inc., 137 Misc. 332, 244 N.Y.S. 455 (Mun.Ct., N.Y.C., Brooklyn, 1st Dist., 1930)).
Consequently, should the situation arise where personal property estimated to be worth $500 or more is included in the purchase price of real property, the estimated value of the personal property should be entered on the EA-5217 in the appropriate space and deducted from the total attributable to “Cash Consideration” and “Assumed Mortgage” to arrive at a “Full Sales Price” for the parcel.
If, however, personal property is being sold in connection with a real estate transfer under a contract separate from the real estate contract, then it would not be necessary to indicate the estimated value of the personalty. Indeed, to do so might be confusing and misleading when attempting to calculate the “full sales price”.
March 3, 1981
NOTE: Cites former rule.