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Reading 1: Real Property vs Personal property: why the difference matters
阅读 1:不动产与动产:为什么区别很重要

All property falls into two categories: real or personal property. Whether something is considered real property or personal property depends on a surprisingly simple test: Can you physically move it? The outcome of that test determines the distinction between real property and personal property, which in turn has real implications for taxation. Consider working with a financial advisor as you make decisions about real and personal property.

What Is Real Property?

Real property is land or things attached to land. That is why you sometimes hear land referred to as real estate or realty. While materials such as wood, metal or other building materials aren't real property on their own, they can become real property if they are attached to land. Vegetation such as trees or plants that grow on land can also be considered real property. However, plants that require routine cultivation or labor, such as crops, may not be considered real property.
Because ownership of real estate includes the rights, interests and benefits inherent in that ownership, real property is a broader, more inclusive term than real estate. For example, real property also includes minerals under the surface of the land as well as airspace above the land's surface. Also, real property includes intangible rights including:
The right of enjoyment - The right to use the property for any lawful purposes
享受权 - 使用财产进行任何合法目的的权利
The right of exclusion - The right to decide who may enter the property and the right to control access to the property
排除权 - 决定谁可以进入财产的权利和控制财产进入的权利
The right of possession - The right to live on the property
占有权 - 在财产上居住的权利
The right of disposition - The right to transfer ownership of the property to another party
处置权 - 将财产所有权转让给另一方的权利
The right of control - The right to destroy, modify or rent out the property to another person - or make any legal decision pertaining to the property
控制权 - 销毁、修改或将财产出租给他人的权利 - 或就财产作出任何法律决定

What Is Personal Property?

Personal property can be broken down into two categories: chattels and intangibles. Chattels refers to all type of property. Often, individuals use it regarding the tangible property such as a purse or clothing. Some chattels are attached to land and can become a part of real property, which are known as fixtures.
In some cases, fixtures may remain personal property. For example, at the end of a lease term, a tenant might have the right to remove fixtures they installed even if they do not have any rights to the real property.
Intangibles are forms of personal property that are not considered tangible. This means that intangible property cannot be touched or seen. The purpose of this category is to accurately address legal rights to property and not to things. Some intangible things may include bank accounts, intellectual property, franchises and licenses, insurance policies, and investments such as stocks or bonds.

Key Differences 关键区别

A closet full of clothesEssentially, personal property is anything you can move and is subject to ownership (except land). Real property cannot be moved and is anything that is attached to land. Generally, determining the clarification for a property is simple since the differences are straightforward. However, there are cases where it is more difficult to determine what type of property you're dealing with.
For instance, let's say you want to build a shed in your backyard. If you visit Home Depot and purchase the materials such as lumber and other tools, this is personal property. But, once you build the structure and it's attached to the land, it becomes real property.

Why the Classification Matters

Classifying real and personal property matters for several reasons. The first reason is that certain concerns may arise when a creditor wants to take possession of equipment that may be attached to a real property or if someone wants to remove a fixture when they move from a property. This concern relates to how a property is taxed, either real or personal.
In the past, many U.S. states taxed all tangible property. Now, to attract new investments and retain manufacturing, some states are moving toward eliminating taxes on personal property. This means that taxpayers' overall tax burden may decrease.
Recategorizing specific assets may have additional tax benefits. Generally, taxpayers can depreciate short-lived personal property faster than long-lived real estate assets. In some instances, how an asset is categorized can divulge instances where a piece of property was unintentionally overlooked from taxation, or worse, received double the taxation.

How to Classify a Property

A young couple standing in front of their first houseDetermining if a piece of property is real or personal is usually simple. But there are some gray areas when determining the classification of certain fixtures. A fixture is an article that was personal property at one point but is now attached to real property in some capacity. Typically, they are classified as real property since they are not attached.
For tax purposes, jurisdictions usually apply a three-part test when classifying a fixture associated with real property. This three-part test includes:
Occupation or Attachment: The jurisdiction evaluates how the property is attached, if it can be removed, and if the removal will cause any damage to the real property.
Adaptation: The jurisdiction evaluates how the property is used relative to the real estate.
Intent: The jurisdiction evaluates if the installment of the property intends to be permanently attached to the real estate or does the use of the real property change the intention of the fixture.
However, there are no rules that constitute a fixture. It's important to note that because of the ambiguity of defining a fixture, taxpayers may face significant taxation issues.
Recommended Readings: Choose your method of doing business : owner or tenant ?

The Bottom Line 底线

Classifying real or personal property is a worthwhile endeavor if you want to reduce your tax burden. Because there is a lack of distinction regarding fixtures, you must become knowledgeable about the local case laws and historical evaluation practices. You may also want to consult with a tax advisor or financial advisor for a professional evaluation of your property tax position.

Tips for Categorizing Your Property

A financial advisor can help you navigate the vagaries of tax law to improve your overall financial picture. Finding the right financial advisor who fits your needs doesn't have to be hard. SmartAsset's free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you're ready to find an advisor who can help you achieve your financial goals, get started now.
财务顾问可以帮助您应对税法的变化,改善您的整体财务状况。找到符合您需求的合适财务顾问并不难。SmartAsset 的免费工具可以为您匹配最多三名服务您所在地区的财务顾问,您可以免费面试您匹配的顾问,以决定哪一位最适合您。如果您准备找到一个可以帮助您实现财务目标的顾问,请立即开始。
Recommended Readings: Choose your method of doing business : owner or tenant ?

Reading 2: Sales & Purchase agreement
阅读 2:销售与采购协议

Sales and Purchase Agreement (SPA): What It Is, With Examples
What Is a Sales and Purchase Agreement (SPA)?
A legal contract that outlines the terms of a transaction and binds an agreement between a buyer and a seller.
A sales and purchase agreement (SPA) is a binding legal contract between two parties that obligates a transaction to occur between a buyer and seller. SPAs are typically used for real estate transactions, but they are found in other areas of business. The agreement finalizes the terms and conditions of the sale, and it is the culmination of negotiations between the buyer and the seller.
销售和购买协议(SPA)是两方之间的具有约束力的法律合同,义务买方和卖方之间发生交易。 SPA 通常用于房地产交易,但它们也出现在其他业务领域。 该协议最终确定了销售的条款和条件,是买方和卖方之间谈判的结果。


  • A sales and purchase agreement (SPA) is a binding legal contract that obligates a buyer to buy and a seller to sell a product or service.
  • SPAs are often used in real estate deals or when two parties are transacting a large item or a large number of items.
    SPA 经常用于房地产交易或当两个交易方在进行大宗商品或大量商品交易时。
  • A SPA details important information including the asset, sales price, and payment terms of the sale.
    SPA 详细说明了销售资产、销售价格和付款条款等重要信息。
  • A SPA also outlines due diligence periods, conditions that must be met before the sale, and what remediation is available if the product is damaged before the sale.
    SPA 还概述了尽职调查期限、在销售前必须满足的条件,以及如果产品在销售前损坏了可以采取的补救措施。
  • A SPA may include language around confidentiality, contingent sales, and broker commissions.
    SPA 可能包括关于保密、有条件销售和经纪佣金的条款。

Understanding a Sales and Purchase Agreement (SPA)

Before a transaction can occur, the buyer and the seller negotiate the price of the item to be sold and the conditions for the transaction. The SPA is a framework for the negotiation process. The SPA is often used in cases of a large purchase, such as a piece of real estate, or frequent purchases over a period.
在交易发生之前,买方和卖方会就待售物品的价格和交易条件进行协商。SPA 是协商过程的框架。SPA 通常用于大宗购买,比如房地产或长期频繁购买的情况。
Once signed, the SPA is a legally-binding document between the parties. Typically, the SPA will be prepared and overseen by an independent third-party to facilitate the transactions closing. The agreement also records when the final sale is to occur.
一旦签署,SPA 是各方之间的具有法律约束力的文件。通常,SPA 将由独立的第三方准备和监督,以促进交易的完成。协议还记录了最终销售将发生的时间。

Contents of a SPA
SPA 的内容

Depending on the size of the transaction, there may be a substantial amount of content within a single SPA. Here are some examples of what you may see in a SPA.
根据交易规模的大小,单个 SPA 中可能包含大量内容。以下是您可能在 SPA 中看到的一些示例。

Asset Identification 资产识别

A SPA outlines the specific asset that is being sold. In the case of real property, the physical location (i.e. address, parcel numbers) are identified. This section is less robust for the sale of duplicative goods that can easily be interchanged.
SPA 概述了正在出售的特定资产。在房地产的情况下,会确定物理位置(即地址、地块编号)。对于可以轻松互换的重复商品的销售,这一部分内容较少。

Purchase Price and Conditions

A SPA defined the exchange price of the transaction. In addition, the agreement outlines what portion of the sale price is due as an upfront deposit as well as how that deposit will be made. This section of the agreement also outlines how the remaining balance (total purchase price less deposit) will be paid.
一个 SPA 定义了交易的交换价格。此外,协议概述了销售价格的哪部分作为预付定金应付,以及如何支付该定金。协议的这一部分还概述了剩余余额(总购买价格减去定金)将如何支付。


A 'sale and purchase agreement' may also be referred to as 'purchase and sale agreement'. In this context, a SPA is the exact same as a PSA.
“销售和购买协议”也可以称为“购买和销售协议”。在这种情况下,SPA 与 PSA 完全相同。

Due Dilligence 尽职调查

For the sale of larger assets, there is often a section within the SPA requiring the purchaser to acknowledge their due diligence within the process. The PSA may outline additional due diligence periods that may correspond to additional deposits or upfront payments.
对于较大资产的出售,通常在 SPA 中有一部分要求购买方承认在过程中进行了尽职调查。 PSA 可能概述可能对应额外存款或预付款的额外尽职调查期。
This section also likely includes indemnification statements and the purchaser's acknowledgment of the condition of the assets. The purchaser also usually certifies their right to terminate the deal under certain circumstances. Last, this section may include clarification on who within the purchaser's team has the authority to make representations on behalf of the company.

Covenants/Conditions Prior to Close

A SPA generally outlines the next steps in the transactions. These conditions of the sale must occur in order for the sale to be legally binding; any inaction or fail to follow these conditions is considered a breach of contract. Under these circumstances, the purchaser may have the right to terminate the sale (if such rights are identified in the section prior).
SPA 通常概述交易中的下一步。为了使销售具有法律约束力,销售的这些条件必须发生;任何不采取行动或未遵守这些条件被视为违约。在这种情况下,购买方可能有权终止销售(如果在之前的部分中确定了这些权利)。
Many of these covenants surround risk mitigation and protection of the asset. This section often outlines what a seller must do if there is any unforeseen litigation impacting the transaction. It also outlines what insurance requirements should cover the asset through sale, what warranties will continue to exist, and certifies the exclusivity of the asset being sold.

Damages/Remedies 损害/补救措施

There may be circumstances in which communication is needed to explain what each party will do if the asset being sold is damaged prior to sale or during transit. This section often defines different levels of damage such as minor damage and major damage. Then, the contract outlines various remedies for each level of damage.
Recommended Readings: Choose your method of doing business : owner or tenant ?

Other Sections 其他部分

If applicable, there may be other sections to a SPA. Real estate transactions will often include title and survey information regarding the property. Specific covenants and conditions may include language involving existing tenants or current conditions of the space.
如果适用,SPA 可能包括其他部分。房地产交易通常会包括有关产权和测量的信息。具体的契约和条件可能涉及现有租户或空间当前状况的语言。
A SPA often outlines applicable broker commissions. Including the dollar amount to be paid, a SPA also details who is responsible for paying commissions as well as the process and timing of issuing those payments.
SPA 经常概述适用的经纪佣金。除了要支付的金额外,SPA 还详细说明了谁负责支付佣金以及支付这些款项的过程和时间。

SPA Length SPA 长度

A SPA can be a single page or it can span hundreds of pages with dozens of supporting exhibits. The purpose of a SPA is to outline at relevant terms and conditions. If there aren't many, the document may be short; if there are many, expect lots of reading.
SPA 可以是单页,也可以是跨越数百页并附带数十个支持展品的文件。SPA 的目的是概述相关条款和条件。如果没有很多,文件可能很短;如果有很多,就会有很多阅读。
For transactions that require confidentiality, a SPA outlines the conditions of the deal. This includes the stipulations around public or press releases, use of promotional materials referencing the sale, and remedies in the event one party breaches this aspect of the contract.
对于需要保密的交易,SPA 概述了交易的条件。这包括围绕公开或新闻发布、使用提及销售的促销材料以及在一方违反合同这一方面时的补救措施的规定。
If the sale is contingent on other transactions, a SPA will outline the effects of termination in any sale should the other deal fall through. For example, imagine a real estate developer attempting to purchase two properties side-by-side with the intention of demolishing both to create one building. The developer may include language in one SPA holding the deal contingent on the execution of the other SPA.
如果销售取决于其他交易,SPA 将概述在其他交易失败时终止销售的影响。例如,想象一个房地产开发商试图购买两个相邻的物业,打算拆除两者以建造一栋建筑。开发商可能在一个 SPA 中包含条款,将交易视为取决于另一个 SPA 的执行。

Examples of SPAs in the Marketplace
市场中 SPA 的例子

One of the most common SPAs occurs during real estate transactions. As part of the negotiation process, a final sales price is agreed upon by both parties. Additionally, other items relevant to the transaction, such as a closing date or contingencies, are also included. 1
房地产交易中最常见的 SPA 之一发生在谈判过程中。作为谈判过程的一部分,最终销售价格由双方达成一致。此外,还包括与交易相关的其他项目,如交割日期或附带条件。
SPAs are used by large, publicly traded companies in their supply chains. A SPA may be used when obtaining a large number of materials from a supplier or in the case of a large-scale single purchase. For example, a company may enter into a SPA with a supplier to purchase a defined quantity of goods for a specific price.
SPA 被大型上市公司在其供应链中使用。当从供应商处获得大量材料或进行大规模单次采购时,可以使用 SPA。例如,公司可能与供应商签订 SPA,以特定价格购买一定数量的商品。
A SPA may also function as a contract for revolving purchases such as a monthly delivery of raw materials, inventory, or other tangible goods. The purchase/selling price can be set in advance, even if the delivery is set at a later date or spread out over time. SPAs are set up to help suppliers and purchasers forecast demand and costs, and they become more critical as the transaction size increases.
SPA 也可以作为循环采购的合同,例如每月交付原材料、库存或其他有形商品。购买/销售价格可以事先确定,即使交付日期设定在以后或分散在一段时间内。SPA 旨在帮助供应商和采购商预测需求和成本,随着交易规模的增加,它们变得更加关键。
In another example, a SPA is often required during a transaction in which one business is acquiring another. Because the SPA specifies the exact nature of what is being bought and sold, the agreement may allow a business to sell its tangible assets to a buyer without selling the naming rights associated with the business. 2
在另一个例子中,在一家企业收购另一家企业的交易中,通常需要一份 SPA。由于 SPA 具体规定了所购买和出售的具体性质,协议可能允许一家企业将其有形资产出售给买家,而不出售与企业相关的命名权。

What Is a Sales and Purchase Agreement?

A sales and purchase agreement is a legally binding agreement obligating a buyer and a seller to terms of a transaction. The SPA outlines all of the terms and conditions of the exchange and must be signed by both parties.
销售和购买协议是一项法律约束力协议,要求买方和卖方遵守交易条款。SPA 概述了交易的所有条款和条件,必须由双方签署。

Do I Need a Sales and Purchase Agreement?

In the exchange of goods, a SPA protects both the buyer and seller. While a SPA is technically not required, it is often a very good idea to have terms and conditions outlined in a legal document prior to the transaction occurring. You will often have no legal recourse in a failed transaction without a contract in place.
在商品交换中,SPA 保护买方和卖方。虽然技术上并不需要 SPA,但在交易发生之前在法律文件中明确条款和条件通常是一个非常好的主意。如果没有签订合同,您在交易失败时通常无法获得法律救济。

Are SPAs Legally Binding?
SPA 是否具有法律约束力?

Yes, SPAs are legally binding. Often the last document furnished as part of the purchase or sale of an asset, it is signed by authorized representatives from both parties when both sides are prepared to execute the deal.
是的,SPA 是具有法律约束力的。通常作为资产购买或出售的一部分提供的最后文件,当双方准备执行交易时,由双方授权代表签署。

Reading 3: Lease Contracts
阅读 3:租赁合同

What Is a Lease?

A contract by which one conveys real estate, equipment, or facilities for a specified term and for a specified rent.
A lease is a contract outlining the terms under which one party agrees to rent an asset-in this case, property-owned by another party. It guarantees the lessee, also known as the tenant, use of the property and guarantees the lessor (the property owner or landlord) regular payments for a specified period in exchange. Both the lessee and the lessor face consequences if they fail to uphold the terms of the contract. A lease is a form of incorporeal right.


  • A lease is a legal, binding contract outlining the terms under which one party agrees to rent property owned by another party.
  • It guarantees the tenant or lessee use of the property and guarantees the property owner or landlord regular payments for a specified period in exchange.
  • Residential leases tend to be the same for all tenants, but there are several different types of commercial leases.
  • Consequences for breaking leases range from mild to damaging, depending on the circumstances under which they are broken.
  • Certain protected groups are able to vacate their leases without any consequences, for which some form of proof is usually required.

Understanding a Lease 理解租赁

Leases are legal and binding contracts that set forth the terms of rental agreements in real estate and real and personal property. These contracts stipulate the duties of each party to effect and maintain the agreement and are enforceable by each. For example, a residential property lease includes:
  • The property address 财产地址
  • Landlord and tenant responsibilities
  • The rent amount 租金金额
  • A required security deposit
  • Rent due date 租金到期日
  • Consequences for breach of contract
  • The duration of the lease
  • Pet policies 宠物政策
  • Other essential information
Not all leases are designed the same, but all of them have some common features. These include the rent amount, the due date of rent, the expiration date of the lease. The landlord requires the tenant to sign the lease, thereby agreeing to its terms before occupying the property.
Most residential leases are standard with the same terms for all tenants. Leases for commercial properties, on the other hand, are usually negotiated in accordance with the specific lessee and typically run from one to 10 years, with larger tenants often having longer, complex lease agreements.
The landlord and tenant should retain a copy of the lease for their records. This is especially helpful if and when any disputes arise.

Reading 4: Representations & Warranties: Real property
阅读 4:陈述与保证:不动产

What kinds of representations and warranties do I need from the Seller if I am purchasing a commercial real estate property?

A representation and warranty about commercial real estate property is the Seller's statement of fact which, if false, entitles the Buyer to a remedy that may include a claim for damages and/or the right to terminate the contract. The Seller typically negotiates to limit the scope of representations and warranties or even to eliminate them with confirmation that the Buyer is purchasing the property in an "as is, where is condition" and will satisfy itself about such items. The Buyer will seek representations and warranties that are as unrestricted as possible, depending on the Buyer's bargaining strength. Representations and warranties limited by time and language such as "to the best of the Seller's knowledge" or "which may have a material adverse effect" are of much lower value to the Buyer. The kinds of representations and warranties that a Buyer should negotiate are statements from a Seller confirming: 
  • the corporate status of the Seller and its authority to enter the Agreement of Purchase and Sale;
  • the status of the property including that there are no taxes owing, no encumbrances or liens on title or which may arise or listing those that are;
  • that the Seller has good and marketable title to the property and that there are no title defects;
  • that there is no pending litigation or expropriation proceedings in relation to the property;
  • that there are no options to purchase or rights of first refusal in connection with the property in favour of other parties;
  • that leases, contracts and permitted encumbrances are in good standing;
  • that there are no encroachments on the property or over adjoining properties;
  • that there is no environmental contamination, no underground storage tanks, no hazardous substances and that the property is in compliance with environmental laws and has not been used as a waste disposal site,
  • and that the property and zoning will permit the Buyer's intended use.
The Buyer investigates the representations and warranties during the due diligence conditional period, but there are some that cannot be determined during that time. The parties will negotiate if these will stand on their own for a period of time beyond the closing date, or end with the closing.

Reading 5: Representations & Warranties: Personal property
阅读 5:陈述与保证:个人财产

What Are Representations and Warranties in a Contract?

Every contract has representations and warranties, which are basically the underlying matters or facts as they are being presented in terms of the contract. When selling something such as real estate, the seller represents themself to be the owner, who has the legal authority to sell the property. The seller warrants that the property is as they represent it to be.

Representations 代表性

When you buy a new washing machine from an appliance store, you go into the process with certain basic suppositions. These include:
  • The store has the right to sell you the washing machine.
  • The washing machine is what the seller says it is in terms of manufacturer and model.
  • The washing machine does what it is advertised to do.
  • The manufacturer/seller warrant that the product is free of defect for a specified amount of time into the future.
A representation is defined as an account or statement of facts, allegations, or arguments. Representations present everything from its past to its current status. In particular, Black's Law Dictionary defines a representation as "a presentation of fact-either by words or by conductmade to induce someone to act, especially to enter into a contract." 

Warranties 保证

A warranty generally moves from the present to the future. The product that you are buying is warranted as being free of defects, and the company agrees to fix any defects for a specified amount of time into the future. Some products advertise that they have a lifetime warranty. As an example, if you buy a set of headphones with a lifetime warranty, then every time they malfunction, you can send them back to the company to be fixed. The warranty obligates the seller to the terms of the contract. 
Warranties can be either expressed or implied. Expressed warranties mean they are written into the contract, and, for the most part, buyers should insist upon them. Implied warranties fall under the Uniform Commercial Code, which in all sales of goods implies that there be a "fitness for a particular purpose." Legally within contracts, expressed warranties hold up better in a court of law than implied warranties. 
When a contract uses the terms "representations" and "warranties" together, they blend the past, present, and future together within terms of the contract. Every contract is different, but the language is basically the same. Representations and warranties are assurances that one party gives to another party in a contract. These assurances are statements that the purchasing party can rely on as factual. 

Reading 6: Transfer of risk of loss in a sale of goods 

What Is Risk? 什么是风险?

The responsibility taken to manage the goods is considered a risk. Meaning once the risk in the goods transfers to you, you are accountable for the following actions: 
Storage and transportation of the goods and;
Any damages sustained on the goods; 
You are held responsible once the goods are physically transferred to you. Regardless of whether or not you collected the goods, they were delivered to you. It is recommended to attain insurance when the risk transfers from the supplier to you. 

What Is Title? 

The legal owner of the goods holds the title. Once the title transfers from the supplier to you, you are now the owner of the goods. The supplier does not hold any rights to the goods because the title of the goods has been transferred. 
The contract must include a warranty if you want the goods to transfer to you. The contract should specify that they have legal title to the goods and that they will be free from any encumbrances and other third-party rights. 

What Is Transfer of Risk? 

A transfer of risk is a business agreement between parties in which one party takes responsibility for mitigating certain losses that may or may not happen. Insurance companies are built on this principle of risk management. 
Risks can be transferred between individuals, from individuals to insurance companies, or from insurers to reinsurers. For instance, you must also purchase car issuance if you purchase a car. This insurance policy covers certain incidents that could have been foreseen or could not have been foreseen. 
When buying insurance, the insurer takes responsibility for paying a certain amount for specific losses or losses. For them to be able to do this, they charge a monthly payment from their customers to fulfill their needs. The insurance companies can cover the necessary costs associated with any damages incurred through these payments. But it depends on your insurance plan and what damages it covers. 
Furthermore, life insurance operates similarly. With the help of actuarial statistics and other information, insurance companies can predict the number of death claims per year. Therefore, the company arranges its premiums at a level that will exceed those death benefits. 
The insurance industry exists to transfer the risk of loss because bearing the risks of loss alone is not enough. However, not all insurance companies can bear the risk of loss alone due to the large loss. They can use reinsurance to cover the other losses. 
Insurance companies can have a cap for the liability payout for their claims. The insurance companies do not want to assume too much risk, and they transfer the excess risk to reinsurance companies. Therefore, having a subcontractor to cover if a major loss happens is a way an insurance company relies on reinsurance tactics. 
Another example of purchasing insurance is for a homeowner. Purchasing a home is considered one of the most significant expenses. Most homeowners obtain homeowners insurance to shield this purchase and protect their investment. 
Before approving someone for insurance, the companies also do their risk management. Meaning they assess their business risks to determine whether a customer is acceptable. Checking the customer's credit profile and understanding what the premiums will entail is common among insurance companies. The policy for the first applicant will command a higher premium due to the higher risk being transferred from the applicant to the insurer. 

What Is the Risk of Loss in the Sale of Goods? 

In a sales contract, generally, the parties agree on terms regarding the nature of goods, prices, and delivery time. However, other issues may arise when dealing with the risk of loss in the sale of goods contracts. 
For instance, one of the biggest concerns is related to the title and when the title transfers to the buyer. In these cases, when third parties are involved in the transaction, a creditor of the seller will not be authorized to take possession of goods in the seller's warehouse if the title has already been passed to the buyer. 
Another issue that can arise is concerning the damage or destruction of goods. Depending on each party's burden, there is a financial significance. For example, if the seller bears the loss, they must pay for the damages or ship another set of goods to the buyer. 
But, if a buyer bears the loss, they must pay for the goods even though they are considered unusable. Without having agreements specifically addressing these issues, losses in the sale of goods will always spark litigation. 

Why Is It Important When Title Shifts? 

Three reasons are considered significant when shifting the title from seller to buyer. First, a sale cannot happen without a shift in title. This is a codified concept in jurisdictions, and you can research through LegalMatch.com to understand more. There must be a price associated with this for the transfer of the title. Essentially, if there is no title shift, there is no sale. With every sale, there is an implied warranty of merchantability. An implied warranty provides that when a merchant-seller sells goods, the goods are suitable for the ordinary purpose for which such goods are utilized. 
Second, the title is crucial because it determines whether creditors can capture the goods. A creditor may have a right to seize the debtor's goods to satisfy a judgment. This means that the title of the goods will not belong to the debtor. Possessing the title for the goods is the primary factor that must be considered. 
Third, the title is related to who has an insurable interest. Insurance cannot be obtained unless the buyer has an insurable interest in the goods. Without an insurable interest, the insurance contract would be considered an illegal gambling contract. 
Therefore, you must possess this insurable interest in the goods to proceed with any gain from them. The question arises when the buyer acquires an insurable interest in the goods. Certainly, a person has an insurable interest if they possess the title. The Uniform Commercial Code (UCC) governs commercial transactions across the United States of America. 
The UCC permits a person with less than full title to have an insurable interest. The argument is between the two insurance companies denying that their insured had an insurable interest to make it liable. In the end, the question is whether the company will be held liable for the damages.