How to Avoid Costly Mistakes in Real Estate Transactions Involving Smart Homes

By: Cristina N. Hyde, JD

Smart technology is here to stay and it seems almost everything from lights to dishwashers can be controlled by a phone.  Homes are considered “smart” when they include upgraded systems that connect elements such as thermostats, security systems, sound systems and appliances to the internet.  Although these systems are designed to simplify life, contracting to purchase or sell a smart home can be tricky.  Here’s why:

  • Technology has created confusion surrounding which elements of a home are legally transferable. Traditionally, items permanently attached to a property, known as “fixtures,”  transfer with the home.  Examples of fixtures include chandeliers, window blinds or shutters, and landscaping.   However, whether or not smart home devices are considered fixtures, is currently debatable.    Where it is likely that devices that merely plug into the wall (such as wireless network hubs and routers) would be considered personal property, items such as smart switches, security cameras, and smart thermostats would likely remain with the home.  These items and their associated service contracts (if any) must be brought to the buyer’s attention.
  • Smart appliances often carry their own warranties. Smart devices are often not covered by your average home warranty due to the high expense and complexity involved in repairs.  Therefore, it is important to know exactly which appliances being transferred are enabled with smart technology and make sure any warranty or service contract that is associated with that item, transfers with the purchase.  If a smart devices is meant to transfer with the property, your real estate contract should provide that accounts associated with that device also be completely transferred at the time of closing.

As with everything else, technological progress also requires an evolved attention to detail.  In order to avoid disputes, listing agents should provide a clear list of all smart devices in a home.  If a device is not going to transfer to the buyer, it should be removed prior to listing the property for sale or listed as an exclusion.  Moreover, all licenses, service contracts and warranties related to smart home elements should be disclosed   Thereafter, parties should be diligent about expressly addressing remaining unclear items in an addendum to the contract when necessary.

If you are considering buying or selling a smart home, Campanella Law Office can help; Contact Us.

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