What’s A Fixture?

GettyImages-109350406-5765b35c5f9b58346ad57727.jpg

Q: For many people in the residential real estate business, questions often arise – from both landlord and tenants – regarding ownership of tenant’s property that becomes “fixed” or “attached” to a part of the landlord’s real property. Particularly in today’s times, tenants want to install high- speed cable modem boxes, additional communications wiring, wall store devices, wine cellars, and more.

Is there any clear cut definition of a “fixture”?

A: You should know better than to ask an attorney for a clear cut definition of anything.

Out of curiosity, I went to the law books for a definition, and perhaps the most interesting answer I found read as follows:

  • Fixtures have been variously defined as a species of property lying
  • along the dividing line between real and personal property.

An early Nebraska Court stated that “fixtures” are in the twilight zone between things real and things personal”.

Thus, the simple answer is that there is no clear cut answer. Different Courts opinions have issued different – and other conflicting – opinions as to what is a fixture.

In layman’s terms, I think we can all agree that a fixture is something which initially was not attached to real property – such as an air conditioning window unit, or a wet bar which was installed in a house after it was built.

The legal issues arise under two different scenarios: the tenant moves out and takes his personal belongings, including those which he had previously attached to the rental unit, or a home purchaser expects that certain items will remain in the house just purchased, only to discover after settlement that the seller has removed them.

Thus, we get litigation. Looking at the legal research material on this issue, it is clear that there have been many court cases attempting to define the concept of what is a fixture and to whom does it belong.

Let’s look at an interesting case which was decided by the District of Columbia Court of Appeals back in l982. Mr. Donahue owned and leased commercial real property in the District, which was operated as a restaurant bar. Mr. Donahue, prior to the commencement of the lease, installed certain equipment in the bar, consisting of two bars, two bar sinks, draft beer system, back bar, garbage disposal, an exhaust system and carpet over a wood floor.

The District of Columbia assessed all of these items for tax purposes as personal property, and the taxpayer appealed. The Court, lamenting the fact that the tax statutes offered no test for distinguishing between realty and personalty, stated the follow:

In this jurisdiction, when determining whether an article is a fixture and, therefore, is included in a conveyance of real estate, the court may consider three factors:

  1. actual annexation, according to the nature and use of the article;
  2. its adaptation to the use for which it was annexed, and
  3. the intention that it should be a permanent accession to the realty.

Isn’t that clear?

How did the Court decide this tax case? Insofar as the District of Columbia had in the past consistently classified equipment and items like these as personal property, the Court deferred to the wisdom of the District and confirmed that all of these items were, in fact, personal property, and Mr. Donohue had to pay the tax.

In l994, this same court struggled with another commercial landlord-tenant issue. The tenant – another restaurant in the District – was unable to pay the rent. However, when the tenant attempted to remove the heating, ventilating and air conditioning equipment (HVAC) it had installed, the landlord barred the tenant from reentering the property. The Court held that “because the HVAC can be removed from the premises without causing irreparable damage to the realty, it was an item of equipment that the tenant had the right to remove upon vacating the premises.” It should be noted that the lease in question specifically gave the tenant this right upon termination of the lease.

The Court also made an interesting observation. It reminded landlords that “any language in a lease that limits the tenant’s right of removal is strictly construed in favor of the tenant.” Thus, when the Court read the lease, it decided that the tenant had this right to remove equipment which it had installed.

Getting back to your specific question, you have raised a number of hypothetical scenarios, and let’s try to respond to each of them. In each case, you state that the item was installed by a tenant for their own personal use, in anticipation of removing the items upon the end of the rental period:

 

  • a lamp fixture attached by a tenant to a ceiling electrical box above the dining room table?In this situation, so long as the fixture can be removed without damage to the ceiling – and the tenant makes sure that there are no open electrical wires which could cause a fire or injury to a person – I believe that the tenant can remove this fixture.
  • a piece of framed art attached by a tenant to a wall. Once again, so long as the artwork can be removed – and any holes in the wall restores – the tenant should be able to remove this item.
  • telephone and cable wires installed by a tenant to enable use of their own telephones, computers, fax machines or televisions. This is a more difficult issue. Are the wires exclusively within the apartment which the tenant rented (assuming that this is not a single family house) or do these wires cut across common areas of the property. If they encroach on common areas, I do not believe the tenant should be permitted to remove the wire.The list can – and does – go on. But there is a moral and a message to this issue, namely: put everything in writing in the lease – or the sales contract – before entering into the transaction. If you are buying a home, and there is an item which you specifically want to remain there, spell this out specifically in the sales contract. For example: “the wall racks installed in the garage shall convey”. Alternatively, if you are a seller, and there are items which you want to remove, make that clear in the sales contract; i.e. “The wall racks installed in the garage do not convey.”

    The same holds true with leases, whether they be residential or commercial. Many leases specifically require a tenant to obtain written permission from the landlord before any item (other than pictures) can be attached to walls. A good lease should also state that any item installed by a tenant can be removed at the termination of the lease, on the condition that no damage is caused to the property during the removal process.

    We are, unfortunately, a litigious society. Landlords get in trouble when they refuse to return security deposits to tenants, and home sellers get in trouble when they take items from the house. The best advice: put it in writing, and have all parties to the transaction sign the document.

    One additional note of interest. Custom and practice in a local community is often forgotten or ignored. For example, it is my understanding that when you sell a house in California, it is customary that the refrigerator does not convey. Thus, I have encountered people coming from the West Coast to purchase real estate here finding that they have two refrigerators, while people going out to California find that they have no refrigerator in the new house they have purchased. Talk with your local real estate agent and your attorney to make sure you fully understand these local customs. But, in the final analysis, a written document is the best protection.

 

Written by Benny L. Kass

Advertisements

Author: Alicia Holman

Experience and passion are just two words that best describe Alicia Holman. As Designated Broker, Alicia is passionate about helping people begin to create wealth through making smart real estate choices. With an extensive background in customer service, her number one priority is the relationships she builds with each and every client. Alicia views helping people buy and sell Arizona real estate as more than a career. It's also her opportunity to make a positive impact in people's lives. Alicia understands the need for distinctive real estate representation. Today, Alicia couldn't ask for a better job. "It’s a great feeling to live and work in an area with so many real estate opportunities. I’ve lived in Arizona for more than 40 years and every day I gain a greater appreciation for all that this area has to offer." As a fulltime broker, Alicia’s approach to real estate is focused around getting to know her clients as real people and taking care of them from beginning to end. Her professional, straightforward approach to real estate has empowered her to listen carefully with interest and understanding to each specific need of her client, in order to assure that he or she is satisfied whether buying or selling.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s