Fixtures and Real Property
When do items attached to real property become a fixture?
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What is a Fixture on Real Property?
A fixture is personal property that is converted into real property by physical annexation to (attachment to or close association with) the land or its buildings.
- Example: A piece of equipment that is physically installed into the floor of a factory building would become a fixture and is one with the property. It is no longer personal property and cannot be removed from the real property without the consent of the real propertys owner.
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Discussion: Should personal property that is permanently attached to real property become part of the real property? Would this have any effect on businesses that sell or rent personal property?
Practice Question: Megan owns a warehousing business. She purchased a $1 million storage facility and financed it with a bank mortgage. She purchased heavy steel shelves to stack heavy pallets of goods and installed them in the factory. The shelves cost approximately $200,000 and are financed by the seller. The steel shelves are anchored to the floor of the building with a heavy steel bolts that are driven into the concrete floor. Has the steel shelving become a fixture of the warehouse building?
- A fixture is an asset that is installed or otherwise fixed in or to a building or land so as to become part of that building or land in law. Awnings, bookcases, lighting, plumbing etc that are attached to a real property in a manner that it becomes a part of that property. Fixtures are sold and transferred with the real property, even if they are not mentioned in the deed. However, if the life of the article (such as a water pump or heater) is assumed to be less than the life of the building, it is classified as an equipment and not a fixture. In the example from the book, steel shelving has become a fixture.
Academic Research on Real Property
- Lower, Michael L., A Brief Explanation and Evaluation of the Law on Fixtures (April 12, 2011). Available at SSRN: https://ssrn.com/abstract=1807786 or http://dx.doi.org/10.2139/ssrn.1807786
- Luther, Peter, Fixtures and Chattels: A Question of More or Less... ( 2004). Oxford Journal of Legal Studies, Vol. 24, pp. 597-618, 2004. Available at SSRN: https://ssrn.com/abstract=815100
- Schroeder, Milton R., Security Interests in Fixtures (1975). Arizona State Law Journal, Vol. 1975, p. 319, 1975. Available at SSRN: https://ssrn.com/abstract=1407637