Who does the Improvements and Trade Fixtures belong to once my lease is up?
Full Question:
Answer:
The relationship of landlord and tenant is created by contract, and the terms of the contract (lease) generally determine the rights of the landlord and tenant. You should carefully review the terms of the lease agreement including any definitions of alterations, improvements and trade fixtures to determine your rights and your landlord's obligations regarding your business.
Generally, improvements made by a tenant that are permanently attached to the property become part of the real estate. A trade fixture is an improvement that is attached to real estate that is unique to the operation of a business. It may be removable by a tenant if it can be done without damaging the property. A trade fixture is installed by a tenant under the terms of a lease and is used in the business of the tenant. Trade fixtures are removable by the tenant before the lease expires, however, the tenant is liable for any damages caused by such removal. They are distinguished from other fixtures which are considered improvements to real property and which must be left intact when the tenant vacates the premises. In the U.S., a sale of land generally includes any permanent fixtures, unless an item is expressly excluded. Trade fixtures are an exception to this general rule. Common factors examined in determining the nature of the fixture include the degree of the item’s annexation or permanence to the property—whether it can be removed without material injury to the land or building to which it was attached; the extent to which the item was adapted for the intended use of the property, that is, its appropriateness for the poses for which the property was used; and the intention of the person who annexed it.
The following are California statutes:
§ 658 Civ.
Real or immovable property consists of:
1. Land;
2. That which is affixed to land;
3. That which is incidental or appurtenant to land;
4. That which is immovable by law; except that for the purposes
of sale, emblements, industrial growing crops and things attached to
or forming part of the land, which are agreed to be severed before sale
or under the contract of sale, shall be treated as goods and be governed by
the provisions of the title of this code regulating the sales of goods.
§ 660 Civ.
A thing is deemed to be affixed to land when it is attached to it by
roots, as in the case of trees, vines, or shrubs; or imbedded in it, as
in the case of walls; or permanently resting upon it, as in the case
of buildings; or permanently attached to what is thus permanent, as by means
of cement, plaster, nails, bolts, or screws; except that for the purposes
of sale, emblements, industrial growing crops and things attached to
or forming part of the land, which are agreed to be severed before sale
or under the contract of sale, shall be treated as goods and be governed by
the provisions of the title of this code regulating the sales of goods.
