It is necessary for landlords and tenants alike to understand what fixtures are.
Real property is generally defined as Real property is defined as “land and improvements to land.”
But is it that simple?
Because real property does not just include land. It also includes structures that are firmly “attached” or “affixed” to the land.
And fixtures are items that go from being personal property separate from the land, to becoming attached to and inseparable from, the land.
What are Fixtures?
A fixture in real property terms is something that may once have been personal property, but has become, or is intended to be attached permanently to the land.
In Georgia, intention is key to determining whether an item is a fixture or not. Anything that is intended to remain in place permanently, is a fixture. This is so even if the object is moveable and is not actually attached to the land.
Understanding what is or is not a fixture is important in both residential and commercial leases. At the end of a lease, the tenant typically is required to leave the premises “broom clean,” and comply with all lease provisions regarding “fixtures.
Difficulties arise, however, in determining what is a fixture. Especially if the object is moveable. This is because a tenant is required to remove anything that he/she installed that is not a “fixture,” but is prohibited from removing anything that has become or was intended to be permanently affixed to the property.
Trade fixtures in commercial leases are a good example of this. A trade fixture is personal property that a business installs in rental property in order to conduct business. Generally speaking, if an item is a trade fixture, it can be removed from the property at the end of the lease. For example, if a commercial baker installs an oven in rental property, so long as it is not a replacement for an oven that used to be there, but is a new installation, it can be removed from the property at the end of the lease. If the fixture is not removed at the end of the lease, it will become the landlord’s property.
How Do You Know if it is a Fixture?
Each state has its own rules regarding fixtures and chattels and when a chattel (i.e., personal property) becomes a fixture.
That said, most cases that involve disputes over fixtures are going to be very fact dependent. In other words, there is no pat solution or formula to give you.
Assuming that the terms of the contract do not specify whether an item is a fixture or not, when attempting to resolve the issue of whether personal property has become a “fixture,” the Georgia courts tend to focus on the intention of the parties. They will consider the nature of the relationship between the parties involved and the intention of the party who affixes the item to the property. They will view these factors as of the time when the item was affixed to the property.
The courts follow a three-part test when analyzing fixture issues.
First, the court will consider the intention of the parties because it is their intention —whether the item was intended to remain with the property or not—that determines the item’s character.
In addition to looking at intention, the court will look at how permanently affixed the item is to the property. In other words, it considers how difficult it would be to remove the item and whether removing it will cause significant damage to the real property or not. The idea is that the more firmly affixed the item is to the land, the more it was intended to remain with the land.
Finally, the courts will also consider whether there is a unity in title of ownership of the item affixed to the land and the property owner. What they are looking for here is whether title to the item resides in one person, while title to the land resides in another. If, for example, title to the land and the item reside in the landlord, then the item will be a fixture. If there is no unity of title, however, the question becomes more difficult to decide.
Ultimately, whether or not something is a fixture is going to be a highly fact dependent determination.
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