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Fixture (property law)

January 01, 1970

This article is about the legal concept. For other uses, see Fixture (disambiguation).

A fixture,[1] as a legal concept, means any physical property that is permanently attached (fixed) to real property (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. 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 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.[2]

A bathroom sink fixture out of order

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.

The characterization of property as a fixture or as chattel is important. In most jurisdictions, the law respecting the registration of security against debt, or proof that money has been lent on the collateral of property, is different for chattels than it is for real property. For example, in the province of Ontario, Canada, mortgages 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. Fixtures put in place by the tenant belong to the landlord if the tenant is evicted 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 civil law as essential parts.[3]

Trade fixtures edit

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 commercial property specifically for their use in a trade or 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 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 landlords 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. 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 edit

In the absence of agreement between the parties,[4][5] the doctrine of fixtures, subject to statute,[6] operates to resolve contests concerning title to objects.

Whether a chattel by its nature,[7][8][9][10] becomes a fixture by virtue of all the circumstances,[11][12][13][14] surrounding their annexation to land,[9][15][16] depends upon (i) the purpose and (ii) degree of annexation.[17][18][19] Semble, it is a mixed question of fact and law,[7][20] to be determined objectively,[5][21][22][23] the subjective intention being a consideration.[8][23][24][25]

Intention of annexation edit

Intention may be ascertained from the annexing party's relation to the land's possessor,[8] when the chattel's use is contemplated,[5] not from the party's agreement.[21][26][27] Objects brought onto land by tenants may become fixtures,[6][28] and this fact may be a significant determining factor.[9][29]

Purpose of annexation edit

Since Palumberi v Palumberi,[12] greater emphasis has been directed to the purpose of annexation. Each case depends upon its own facts,[30] however a guiding test,[31] is whether a chattel has been fixed with the intention that it shall remain in position 'permanently or for an indefinite or substantial period',[17] or only for some temporary purpose.[17][32][33]: p 712–3 

Degree of annexation edit

Where the object is not resting by its own weight,[8][7][17][34][35] this will raise the rebuttable presumption,[23][36] that the chattel is a fixture.[14][15][16][24] Non-affixed objects may become fixtures especially when they will be used for an extensive period.[37][38][39]

Further indicators include whether the object can be detached without substantial damage being caused,[17][40][41][42] whether it was fixed for the better enjoyment of the land,[39][43] or the object itself,[17][26][31][44] the period of time in use and its function,[5] the function served by its annexation,[31] and whether the cost of renewal would exceed the value of the property.[38]

Tenant's rights of removal edit

A tenant's right of removal does not extend to agricultural fixtures at common law.[45] However, under New South Wales legislation, tenants can remove agricultural fixtures in certain circumstances, subject to landlords' statutory rights pertaining to fixtures.[46]

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.[47]

See also edit

References edit

  1. ^ "Residential Conveyancing A-Z of Key Terms and Abbreviations". Wilson Browne Solicitors.
  2. ^ Ziff, Bruce (2006). Principles of Property Law (4th ed.). Toronto: ThomsonCarswell. p. 102. ISBN 0-459-55339-9.
  3. ^ Section 93 of the German Civil Code:

    "Section 93 Essential parts of a thing

    "Parts of a thing that cannot be separated without one or the other being destroyed or undergoing a change of nature (essential parts) cannot be the subject of separate rights.
  4. ^ Appleby v Myers (1867) LR 2 CP 651.
  5. ^ a b c d Hobson v Gorringe [1897] 1 Ch 182.
  6. ^ a b North Shore Gas Company Limited v Commissioner of Stamp Duties (NSW) [1940] HCA 7, (1940) 63 CLR 52, High Court (Australia).
  7. ^ a b c Monti v Barnes [1901] 1 QB 205, 207 (A.L. Smith MR).
  8. ^ a b c d Reid v Smith [1905] HCA 54, (1905) 3 CLR 656, High Court (Australia)
  9. ^ a b c Leigh v Taylor [1902] UKHL 1, (1902) AC 157 at 158 per Lord Halsbury L.C., House of Lords (UK).
  10. ^ Lees & Leech Pty Ltd v Commissioner of Taxation [1997] FCA 404, Federal Court (Australia).
  11. ^ Commissioner of State Revenue v Uniqema Pty Ltd [2004] VSCA 82 at [47], (2004) 9 VR 523, Court of Appeal (Vic, Australia).
  12. ^ a b Palumberi v Palumberi [1986] NSW Conv R 55-673 (13 May 1986) Supreme Court (NSW, Australia).
  13. ^ Pan United Marine Ltd v Chief Assessor, Singapore [2007] SGHC 21, High Court (Singapore)
  14. ^ a b Compare with Australian Provincial Assurance Co v Coroneo [1938] NSWStRp 35, (1938) 38 SR (NSW) 700, Supreme Court (NSW, Australia).
  15. ^ a b Belgrave Nominees Pty Ltd v Barlin-Scott Airconditioning (Aust) Pty Ltd [1984] VicRp 75, (1984) VR 947, Supreme Court (Vic, Australia).
  16. ^ a b National Australia Bank v Blacker [2000] FCA 1458, (2000) 104 FCR 288; 179 ALR 97, Federal Court (Australia).
  17. ^ a b c d e f Holland v Hodgson (1872) LR 7 CP 328, 334 (Blackburn J)
  18. ^ Commissioner for Railways v Valuer-General [1973] UKPC 3, [1974] AC 328, Privy Council (on appeal from NSW).
  19. ^ Commissioner of Stamps (WA) v L Whiteman Limited [1940] HCA 30, (1940) 64 CLR 407, High Court (Australia).
  20. ^ Compage with Reynolds v Ashby & Son [1904] UKHL 490, [1904] AC 461, House of Lords (UK).
  21. ^ a b Melluish v BMI (No 3) [1996] AC 454.
  22. ^ Permanent Trustee Australia Ltd v Esanda Corporation Ltd (1991) 6 BPR 13,420.
  23. ^ a b c Anthony v Commonwealth (1973) 47 ALJR 83, Text of Judgment[permanent dead link] (26 January 1973) High Court (Australia).
  24. ^ a b May v Ceedive Pty Limited [2006] NSWCA 369, Court of Appeal (NSW, Australia)
  25. ^ Compare with Ball-Guymer Ltd v Livantes (1992) 102 FLR 327 (21 November 1990) Supreme Court (ACT, Australia).
  26. ^ a b Reynolds v Ashby & Son [1904] UKHL 490, [1904] AC 461, House of Lords (UK).
  27. ^ Eastern Nitrogen Ltd v Commissioner of Taxation [1999] FCA 1539, Federal Court (Australia).
  28. ^ Eon Metals NL v Commissioner of State Taxation (WA) [1991] WASC 411, (1991) 22 ATR 601, Supreme Court (WA, Australia).
  29. ^ Mitchell v McNeil [1909] WALawRp 27, (1909) 11 WALR 153, Supreme Court (WA, Australia).
  30. ^ Jiwira v Primary Industry of Bank Authority [2000] NSWSC 1094, Supreme Court (NSW, Australia).
  31. ^ a b c N H Dunn Pty Ltd v LM Ericsson Pty Ltd [1980] ANZ Conv R 300; (1979) 2 BPR 9241 (6 December 1979) Supreme Court (NSW, Australia)
  32. ^ Vaudeville Electric Cinema Ltd v Muriset [1923] 2 Ch 74.
  33. ^ Australian Provincial Assurance Co v Coroneo [1938] NSWStRp 35, (1938) 38 SR (NSW) 700, Supreme Court (NSW, Australia).
  34. ^ Wiltshear v Cottrell (1853) 1 E & B 674.
  35. ^ Australian Joint Stock Bank v Colonial Finance Mortgage, Investment & Guarantee Corporation [1894] NSWLawRp 124, (1894) 15 LR (NSW) 464, Supreme Court (NSW, Australia).
  36. ^ Attorney-General (Cth) v R T Co Pty Ltd (No. 2) [1957] HCA 29, (1957) 97 CLR 146, High Court (Australia).
  37. ^ Re Starline Furniture Pty Ltd (In Liq) [1982] 6 ACLR 312 (1 January 1982) Supreme Court (Tas, Australia).
  38. ^ a b FCT v Metal Manufacturers Ltd [2001] FCA 365, (2001) 108 FCR 150; 46 ATR 497, Federal Court (Australia).
  39. ^ a b Interconnected items of plant and equipment used as a milk processing plant in a dairy business were held to be fixtures in National Dairies WA Ltd v Commissioner of State Revenue [2011] WASCA 112, (2001) 24 WAR 70, Court of Appeal (WA, Australia).
  40. ^ Hellawell v Eastwood (1851) 6 Ex 295
  41. ^ Spyer v Phillipson [1931] 2 Ch 183
  42. ^ Adams v Medhurst & Sons Pty Ltd [1929] TASLawRp 7, (1929) 24 Tas LR 48, Supreme Court (Tas, Australia).
  43. ^ Re Cancer Care Institute of Australia Pty Ltd [2013] NSWSC 37, Supreme Court (NSW, Australia).
  44. ^ Climie v Wood (1868) LR 3 Ex 257.
  45. ^ Elwes v Maw (1802) 3 East 38.
  46. ^ Agricultural Tenancies Act 1990 (NSW).
  47. ^ "How to: Make good at the end of your lease". realcommercial.com.au. Retrieved 1 October 2017.

January 01, 1970
fixture, property, this, article, about, legal, concept, other, uses, fixture, disambiguation, this, article, provide, balanced, coverage, countries, other, than, australia, canada, please, improve, this, article, discuss, issue, talk, page, october, 2011, fix. This article is about the legal concept For other uses see Fixture disambiguation This article may not provide balanced coverage on countries other than Australia and Canada Please improve this article or discuss the issue on the talk page October 2011 A fixture 1 as a legal concept means any physical property that is permanently attached fixed to real property 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 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 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 2 A bathroom sink fixture out of order 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 The characterization of property as a fixture or as chattel is important In most jurisdictions the law respecting the registration of security against debt or proof that money has been lent on the collateral of property is different for chattels than it is for real property For example in the province of Ontario Canada mortgages 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 Fixtures put in place by the tenant belong to the landlord if the tenant is evicted 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 civil law as essential parts 3 Contents 1 Trade fixtures 2 Law in Australia 2 1 Intention of annexation 2 2 Purpose of annexation 2 3 Degree of annexation 2 4 Tenant s rights of removal 3 See also 4 ReferencesTrade fixtures editAn 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 commercial property specifically for their use in a trade or 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 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 landlords 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 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 editIn the absence of agreement between the parties 4 5 the doctrine of fixtures subject to statute 6 operates to resolve contests concerning title to objects Whether a chattel by its nature 7 8 9 10 becomes a fixture by virtue of all the circumstances 11 12 13 14 surrounding their annexation to land 9 15 16 depends upon i the purpose and ii degree of annexation 17 18 19 Semble it is a mixed question of fact and law 7 20 to be determined objectively 5 21 22 23 the subjective intention being a consideration 8 23 24 25 Intention of annexation edit Intention may be ascertained from the annexing party s relation to the land s possessor 8 when the chattel s use is contemplated 5 not from the party s agreement 21 26 27 Objects brought onto land by tenants may become fixtures 6 28 and this fact may be a significant determining factor 9 29 Purpose of annexation edit Since Palumberi v Palumberi 12 greater emphasis has been directed to the purpose of annexation Each case depends upon its own facts 30 however a guiding test 31 is whether a chattel has been fixed with the intention that it shall remain in position permanently or for an indefinite or substantial period 17 or only for some temporary purpose 17 32 33 p 712 3 Degree of annexation edit Where the object is not resting by its own weight 8 7 17 34 35 this will raise the rebuttable presumption 23 36 that the chattel is a fixture 14 15 16 24 Non affixed objects may become fixtures especially when they will be used for an extensive period 37 38 39 Further indicators include whether the object can be detached without substantial damage being caused 17 40 41 42 whether it was fixed for the better enjoyment of the land 39 43 or the object itself 17 26 31 44 the period of time in use and its function 5 the function served by its annexation 31 and whether the cost of renewal would exceed the value of the property 38 Tenant s rights of removal edit A tenant s right of removal does not extend to agricultural fixtures at common law 45 However under New South Wales legislation tenants can remove agricultural fixtures in certain circumstances subject to landlords statutory rights pertaining to fixtures 46 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 47 See also editQuicquid plantatur solo solo ceditReferences edit Residential Conveyancing A Z of Key Terms and Abbreviations Wilson Browne Solicitors Ziff Bruce 2006 Principles of Property Law 4th ed Toronto ThomsonCarswell p 102 ISBN 0 459 55339 9 Section 93 of the German Civil Code Section 93 Essential parts of a thing Parts of a thing that cannot be separated without one or the other being destroyed or undergoing a change of nature essential parts cannot be the subject of separate rights Appleby v Myers 1867 LR 2 CP 651 a b c d Hobson v Gorringe 1897 1 Ch 182 a b North Shore Gas Company Limited v Commissioner of Stamp Duties NSW 1940 HCA 7 1940 63 CLR 52 High Court Australia a b c Monti v Barnes 1901 1 QB 205 207 A L Smith MR a b c d Reid v Smith 1905 HCA 54 1905 3 CLR 656 High Court Australia a b c Leigh v Taylor 1902 UKHL 1 1902 AC 157 at 158 per Lord Halsbury L C House of Lords UK Lees amp Leech Pty Ltd v Commissioner of Taxation 1997 FCA 404 Federal Court Australia Commissioner of State Revenue v Uniqema Pty Ltd 2004 VSCA 82 at 47 2004 9 VR 523 Court of Appeal Vic Australia a b Palumberi v Palumberi 1986 NSW Conv R 55 673 13 May 1986 Supreme Court NSW Australia Pan United Marine Ltd v Chief Assessor Singapore 2007 SGHC 21 High Court Singapore a b Compare with Australian Provincial Assurance Co v Coroneo 1938 NSWStRp 35 1938 38 SR NSW 700 Supreme Court NSW Australia a b Belgrave Nominees Pty Ltd v Barlin Scott Airconditioning Aust Pty Ltd 1984 VicRp 75 1984 VR 947 Supreme Court Vic Australia a b National Australia Bank v Blacker 2000 FCA 1458 2000 104 FCR 288 179 ALR 97 Federal Court Australia a b c d e f Holland v Hodgson 1872 LR 7 CP 328 334 Blackburn J Commissioner for Railways v Valuer General 1973 UKPC 3 1974 AC 328 Privy Council on appeal from NSW Commissioner of Stamps WA v L Whiteman Limited 1940 HCA 30 1940 64 CLR 407 High Court Australia Compage with Reynolds v Ashby amp Son 1904 UKHL 490 1904 AC 461 House of Lords UK a b Melluish v BMI No 3 1996 AC 454 Permanent Trustee Australia Ltd v Esanda Corporation Ltd 1991 6 BPR 13 420 a b c Anthony v Commonwealth 1973 47 ALJR 83 Text of Judgment permanent dead link 26 January 1973 High Court Australia a b May v Ceedive Pty Limited 2006 NSWCA 369 Court of Appeal NSW Australia Compare with Ball Guymer Ltd v Livantes 1992 102 FLR 327 21 November 1990 Supreme Court ACT Australia a b Reynolds v Ashby amp Son 1904 UKHL 490 1904 AC 461 House of Lords UK Eastern Nitrogen Ltd v Commissioner of Taxation 1999 FCA 1539 Federal Court Australia Eon Metals NL v Commissioner of State Taxation WA 1991 WASC 411 1991 22 ATR 601 Supreme Court WA Australia Mitchell v McNeil 1909 WALawRp 27 1909 11 WALR 153 Supreme Court WA Australia Jiwira v Primary Industry of Bank Authority 2000 NSWSC 1094 Supreme Court NSW Australia a b c N H Dunn Pty Ltd v LM Ericsson Pty Ltd 1980 ANZ Conv R 300 1979 2 BPR 9241 6 December 1979 Supreme Court NSW Australia Vaudeville Electric Cinema Ltd v Muriset 1923 2 Ch 74 Australian Provincial Assurance Co v Coroneo 1938 NSWStRp 35 1938 38 SR NSW 700 Supreme Court NSW Australia Wiltshear v Cottrell 1853 1 E amp B 674 Australian Joint Stock Bank v Colonial Finance Mortgage Investment amp Guarantee Corporation 1894 NSWLawRp 124 1894 15 LR NSW 464 Supreme Court NSW Australia Attorney General Cth v R T Co Pty Ltd No 2 1957 HCA 29 1957 97 CLR 146 High Court Australia Re Starline Furniture Pty Ltd In Liq 1982 6 ACLR 312 1 January 1982 Supreme Court Tas Australia a b FCT v Metal Manufacturers Ltd 2001 FCA 365 2001 108 FCR 150 46 ATR 497 Federal Court Australia a b Interconnected items of plant and equipment used as a milk processing plant in a dairy business were held to be fixtures in National Dairies WA Ltd v Commissioner of State Revenue 2011 WASCA 112 2001 24 WAR 70 Court of Appeal WA Australia Hellawell v Eastwood 1851 6 Ex 295 Spyer v Phillipson 1931 2 Ch 183 Adams v Medhurst amp Sons Pty Ltd 1929 TASLawRp 7 1929 24 Tas LR 48 Supreme Court Tas Australia Re Cancer Care Institute of Australia Pty Ltd 2013 NSWSC 37 Supreme Court NSW Australia Climie v Wood 1868 LR 3 Ex 257 Elwes v Maw 1802 3 East 38 Agricultural Tenancies Act 1990 NSW How to Make good at the end of your lease realcommercial com au Retrieved 1 October 2017 Retrieved from https en wikipedia org w index php title Fixture property law amp oldid 1218955448, wikipedia, wiki, book, books, library,

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