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A fixture, as a
legal concept Law is a system of rules created and law enforcement, enforced through social or governmental institutions to regulate behavior,Robertson, ''Crimes against humanity'', 90. with its precise definition a matter of longstanding debate. It has bee ...
, means any physical property that is permanently attached (''fixed'') to
real property In English English usually refers to: * English language English is a West Germanic languages, West Germanic language first spoken in History of Anglo-Saxon England, early medieval England, which has eventually become the World la ...
(usually land). Property not affixed to real property is considered ''chattel'' property. Fixtures are treated as a part of real property, particularly in the case of a
security interest In finance Finance is a term for the management, creation, and study of money In a 1786 James Gillray caricature, the plentiful money bags handed to King George III are contrasted with the beggar whose legs and arms were amputated, in ...
. A classic example of a fixture is a building, which, in the absence of language to the contrary in a contract of sale, is considered part of the land itself and not a separate piece of property. Generally speaking, the
test Test(s), testing, or TEST may refer to: * Test (assessment) A test or examination (exam or evaluation) is an educational assessment Educational assessment or educational evaluation is the systematic process of documenting and using em ...
for deciding whether an article is a fixture or a chattel turns on the purpose of attachment. If the purpose was to enhance the land, the article is likely a fixture; if the article was affixed to enhance the use of the chattel itself, the article is likely a chattel. Chattel property is converted into a fixture by the process of attachment. For example, if a piece of lumber sits in a lumber yard, it is a chattel. If the same lumber is used to build a fence on the land, it becomes a fixture to that real property. In many cases, the determination of whether property is a fixture or a chattel turns on the degree to which the property is attached to the land. For example, this problem arises in the case of a trailer home. In this case, the characterization of the home as chattel or realty will depend on how permanently it is attached, such as whether the trailer has a
foundation Foundation may refer to: * Foundation (nonprofit), a type of charitable organization ** Foundation (United States law), a type of charitable organization in the U.S. ** Private foundation, a charitable organization that, while serving a good cause ...
. The characterization of property as a fixture or as chattel is important. In most
jurisdiction Jurisdiction (from Latin Latin (, or , ) is a classical language A classical language is a language A language is a structured system of communication Communication (from Latin ''communicare'', meaning "to share" or "to be i ...
s, the law respecting the registration of
security Security is freedom from, or resilience against, potential Potential generally refers to a currently unrealized ability. The term is used in a wide variety of fields, from physics Physics is the natural science that studies matter, its El ...
against
debt Debt is an obligation that requires one party, the debtor A debtor or debitor is a legal entity (legal person) that owes a debt Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to ...

debt
, or proof that money has been lent on the
collateral Collateral may refer to: Business and finance * Collateral (finance), a borrower's pledge of specific property to a lender, to secure repayment of a loan * Marketing collateral, in marketing and sales Arts, entertainment, and media * Collateral ...
of property, is different for chattels than it is for real property. For example, in the province of
Ontario ("Loyal she began, loyal she remains") , Label_map = yes , image_map = Ontario in Canada 2.svg , map_alt = Map showing Ontario's location east/central of Canada. , coordinates = , cap ...

Ontario
, Canada,
mortgage A mortgage loan or simply mortgage () is a loan In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations etc. The recipient (i.e., the borrower) incurs a ...
s against real property must be registered in the county or region's land titles office. However, mortgages against chattels must be registered in the province-wide registry set up under the '' Personal Property Security Act''. In the case of a trailer home, whether it is a fixture or chattel has a bearing on whether a real property mortgage applies to the trailer. For example, most mortgages contain a clause that forbids the borrower from removing or demolishing fixtures on the property, which would lower the value of the security. However, there have been cases where lenders lend money based on the value of the trailer home on the property, where that trailer is later removed from the property. Similarly, a chattel mortgage granted to allow a person to purchase a trailer home could be lost if the trailer is later attached to real property. The law regarding fixtures can also cause many problems with property held under a
lease A lease is a contractual arrangement calling for the user (referred to as the ''lessee'') to pay the owner (the Lessor (leasing), ''lessor'') for use of an asset. Property, buildings and vehicles are common assets that are leased. Industrial o ...

lease
. Fixtures put in place by the tenant belong to the
landlord A landlord is the owner of a house A house is a single-unit residential building A building, or edifice, is a structure with a roof and walls standing more or less permanently in one place, such as a house or factory. Buildings come in a ...
if the tenant is
evicted Eviction is the removal of a tenant from rental property by the landlord A landlord is the owner of a house A house is a single-unit residential building A building, or edifice, is a structure with a roof and walls standing more ...
from the property. This is the case even if the fixture could have legally been removed by the tenant while the lease was in good standing. For example, a chandelier hung by the tenant may become the property of the landlord. Although this example is trivial, there have been cases where heavy equipment incorporated into a plant has been deemed to have become fixtures even though it was sold as chattels. Because the value of fixtures often exceeds the value of the land they are affixed to, lawsuits to determine whether a particular item is a chattel or a fixture are common. In one case in Canada, a provincial government argued that a huge earth dam was a chattel, as it was only held in place by gravity and not by any type of affixation (the claim was rejected). In a sale of land, fixtures are treated as part of the land, and may not be removed or altered by the seller prior to the transfer of the land. Fixtures are known in
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as essential parts.


Trade fixtures

An important exception to the usual treatment of fixtures is the category of trade fixtures (often called "chattel" fixtures), chattels installed by a tenant on
leased A lease is a contract A contract is a legally binding agreement that defines and governs the rights and duties between or among its parties Image:'Hip, Hip, Hurrah! Artist Festival at Skagen', by Peder Severin Krøyer (1888) Demisted ...

leased
commercial property specifically for their use in a trade or
business Business is the activity of making one's living or making money by producing or buying and selling products (such as goods and services). Simply put, it is "any activity or enterprise entered into for profit." Having a business name A trad ...

business
. These may always be removed by the tenant, so long as any damage to the structure caused by the removal is repaid or repaired. For example, business signage, display counters, store shelves, liquor bars, and machining equipment are often firmly, if not almost permanently, attached to the building or land. However, they remain
personal property Personal property is property Property is a system of rights that gives people legal control of valuable things, and also refers to the valuable things themselves. Depending on the nature of the property, an owner of property may have the ...
and can be removed by the tenant, since they are part of the tenant's business. The economic logic behind this exception for trade fixtures reckons that if tenants could not remove them, then
landlord A landlord is the owner of a house A house is a single-unit residential building A building, or edifice, is a structure with a roof and walls standing more or less permanently in one place, such as a house or factory. Buildings come in a ...
s would bear the responsibility of outfitting their tenants with such equipment and materials. By deduction, therefore, a trade fixture is not a fixture at all. Its name is misleading, since a fixture, by definition, is real property that must remain with the real estate when a seller sells it or a tenant leaves her lease. A trade "fixture" is not real property, but personal property of the tenant. The landlord does have some protection. Any damage to the real property caused by the tenant’s removal of trade fixtures must be repaired or paid for by the tenant. If a trade fixture is not removed when the tenant moves out, those trade fixtures become the landlord’s property through the process of
accession Accession refers to the general idea of joining or adding to. It may also refer to: *Accession (property law) * Accession, the act of joining a treaty by a party that did not take part in its negotiations; see Vienna Convention on the Law of Treati ...
. For example, if a restaurant goes bankrupt and the owner forgoes his right and the expense of removing all the kitchen equipment, dining booths and other trade fixtures, those trade fixtures become the landlord's property. In this manner, they will no longer be trade fixtures and can actually become regular fixtures, hence real property.


Law in Australia

In the absence of agreement between the parties,''Appleby v Myers'' (1867) LR 2 CP 651.''Hobson v Gorringe''
897 __NOTOC__ Year 897 ( DCCCXCVII) was a common year starting on Saturday A common year starting on Saturday is any non-leap year A leap year (also known as an intercalary year or wikt:bissextile, bissextile year) is a calendar year that conta ...
1 Ch 182.
the doctrine of fixtures, subject to statute,. operates to resolve contests concerning title to objects. Whether a chattel by its nature,''Monti v Barnes''
901 __NOTOC__ Year 901 ( CMI) was a common year starting on Thursday A common year starting on Thursday is any non-leap year A leap year (also known as an intercalary year or wikt:bissextile, bissextile year) is a calendar year that contains an ...
1 QB 205, 207 (A.L. Smith MR).
.. becomes a fixture by virtue of all the circumstances,.''Palumberi v Palumberi''
986 Year 986 (Roman numerals, CMLXXXVI) was a common year starting on Friday (link will display the full calendar) of the Julian calendar. Events By place Byzantine Empire * August 17 – Battle of the Gates of Trajan: Emperor Basil ...
NSW Conv R 55-673 (13 May 1986)
Supreme Court A supreme court is the highest court A court is any person or institution, often as a government institution, with the authority to Adjudication, adjudicate legal disputes between Party (law), parties and carry out the administration of just ...
(NSW, Australia).
Compare with . surrounding their annexation to land,.. depends upon (i) the purpose and (ii) degree of annexation.''Holland v Hodgson'' (1872) LR 7 CP 328, 334 (Blackburn J).. Semble, it is a mixed question of fact and law, to be determined objectively,''Melluish v BMI (No 3)''
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AC 454.
the subjective intention being a consideration.''Anthony v Commonwealth'' (1973) 47 ALJR 83
Text of Judgment
(26 January 1973)
High Court High court usually refers to the superior court In common law In law, common law (also known as judicial precedent or judge-made law, or case law Case law is the collection of past legal decisions written by courts and similar tribunal ...

High Court
(Australia).


Intention of annexation

Intention may be ascertained from the annexing party's relation to the land’s possessor, when the chattel’s use is contemplated, not from the party's agreement... Objects brought onto land by tenants may become fixtures, and this fact may be a significant determining factor.


Purpose of annexation

Since Palumberi v Palumberi, greater emphasis has been directed to the purpose of annexation. Each case depends upon its own facts, however a guiding test,''N H Dunn Pty Ltd v LM Ericsson Pty Ltd''
980 Year 980 ( CMLXXX) was a leap year starting on Thursday A leap year starting on Thursday is any year with 366 days (i.e. it includes 29 February) that begins on Thursday Thursday is the day of the week between Wednesday Wednesday is the ...
ANZ Conv R 300; (1979) 2 BPR 9241 (6 December 1979)
Supreme Court A supreme court is the highest court A court is any person or institution, often as a government institution, with the authority to Adjudication, adjudicate legal disputes between Party (law), parties and carry out the administration of just ...
(NSW, Australia)
is whether a chattel has been fixed with the intention that it shall remain in position 'permanently or for an indefinite or substantial period', or only for some temporary purpose..


Degree of annexation

Where the object is not resting by its own weight, this will raise the rebuttable presumption, that the chattel is a fixture. Non-affixed objects may become fixtures especially when they will be used for an extensive period.. Further indicators include whether the object can be detached without substantial damage being caused, whether it was fixed for the better enjoyment of the land,Interconnected items of plant and equipment used as a milk processing plant in a dairy business were held to be fixtures in .. or the object itself, the period of time in use and its function, the function served by its annexation, and whether the cost of renewal would exceed the value of the property.


Tenant's rights of removal

A tenant's right of removal does not extend to agricultural fixtures at common law. However, under New South Wales legislation, tenants can remove agricultural fixtures in certain circumstances, subject to landlords' statutory rights pertaining to fixtures. In most commercial real estate leases, a tenant has the obligation to restore the leasehold improvements back to a base building condition at the expiry of the lease term.


See also

* Quicquid plantatur solo, solo cedit


References

{{reflist, 30em Property law Real property law