Fixture (Law)
Fixtures are items of property that can’t be moved, and this meaning also carries over to legal settings. Fixtures, in a legal setting, are physical items permanently affixed to real property (mostly land). Items of property that aren’t affixed to real property are referred to as ‘chattel’. In legal considerations, fixtures are treated the same as real property and not separate from it. A house built on a plot of land, for instance, is acknowledged as an extension of the land itself, and not a separate from it, unless otherwise specified in the sales contract. When determining whether a particular item of property is fixture or chattel, the purpose of its installation is normally considered. If the item was attached for the purpose of enhancing the land, it’s fixture, and if it was attached for the purpose of enhancing an existing chattel, its likely a chattel itself.
A fixture can’t be converted into chattel property, but chattel can be turned into fixtures by making them a part of the real property. A stack of lumber sitting in a yard, for example, is chattel as the lumber can be moved around and even removed from the property. However, using that lumber to make a fence on the property turns it into a fixture on the real property. In other instances, when determining the nature of property as chattel or a fixture, the extent to which the property is attached to real property is also considered. This generally comes into play with trailer homes, where the determination of their status as chattel or fixture is dependent on their degree of attachment to the land they’re on; a trailer with a solid foundation, for example, will be treated as a fixture.
It sometimes becomes important to determine the nature of property as chattel or fixture; a good example of such a situation would be when registering property as collateral while taking out a loan as the law regarding registration of collateral property differs for chattel and for real property in most jurisdiction. Laws surrounding fixtures on leased property can also be a cause for concern in some instances. For example, fixtures installed by the tenant may be legally removed as long as the lease is active, but become a property of the landlord in case of an eviction, and cannot be removed by the tenant after that point.
A common exception to how fixtures are treated comes in the form of ‘trade fixtures’, also called chattel fixtures. These are fixtures installed by the tenant on a commercially leased property for business use. The tenant retains ownership of these fixtures and they can almost always be removed as long as the landlord is reimbursed for any physical or structural damages these fixtures may have caused, or the damages are repaired. Examples of this are shelves, store displays, signage, and machinery, all of which may be permanently affixed to a building but remain the tenant’s property as they are a part of their business.