Is a Propane Heater a Fixture or An Appliance?

Full Question:

Is a propane gas space heater which is only attached to a fuel line but not affixed to anything using any type of permanent means such as nails, screws, cement, bolts, etc., but is only free standing is this a fixture or a appliance?
01/14/2010   |   Category: Personal Property   |   State: Wisconsin   |   #20441

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 the heater.

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 purposes for which the property was used; and the intention of the person who annexed it.

Please see the following WI statutes:

411.309 Lessor's and lessee's rights when goods become fixtures.

(1) In this section:

(a) "Construction mortgage" means a mortgage that secures an
obligation incurred for the construction of an improvement on land
including the acquisition cost of the land, if the recorded writing so
indicates.

(b) "Encumbrance" includes real estate mortgages and other liens on
real estate and all other rights in real estate that are not ownership
interests.

(c) "Fixture filing" means a filing, in the office where a record of a
mortgage on real estate would be filed or recorded, of a financing
statement covering goods that are or are to become fixtures and
conforming to the requirements of s. 409.502 (1) and (2).

(d) "Fixtures" means goods that become so related to particular real
estate that an interest in them arises under real estate law.

(e) "Purchase money lease" means a lease unless the lessee has
possession or use of the goods or the right to possession or use of
the goods before the lease agreement is enforceable.

(2) Under this chapter a lease may be of goods that are fixtures or
may continue in goods that become fixtures, but no lease exists under
this chapter of ordinary building materials incorporated into an
improvement on land.

(3) This chapter does not prevent creation of a lease of fixtures
under real estate law.

(4) The perfected interest of a lessor of fixtures has priority over a
conflicting interest of an encumbrancer or owner of the real estate if
any of the following occurs:

(a) The lease is a purchase money lease, the conflicting interest of
the encumbrancer or owner arises before the goods become fixtures, the
interest of the lessor is perfected by a fixture filing before the
goods become fixtures or within 10 days thereafter, and the lessee has
an interest of record in the real estate or is in possession of the
real estate.

(b) The interest of the lessor is perfected by a fixture filing before
the interest of the encumbrancer or owner is of record, the lessor's
interest has priority over any conflicting interest of a predecessor
in title of the encumbrancer or owner, and the lessee has an interest
of record in the real estate or is in possession of the real estate.

(5) The interest of a lessor of fixtures, whether or not perfected,
has priority over the conflicting interest of an encumbrancer or owner
of the real estate if any of the following applies:

(a) The fixtures are readily removable factory or office machines,
readily removable equipment that is not primarily used or leased for
use in the operation of the real estate, or readily removable
replacements of domestic appliances that are goods subject to a
consumer lease, and before the goods become fixtures the lease
contract is enforceable.

(b) The conflicting interest is a lien on the real estate obtained by
legal or equitable proceedings after the lease contract is
enforceable.

(c) The encumbrancer or owner consents in writing to the lease or
disclaims an interest in the goods as fixtures.

(d) The lessee has a right to remove the goods as against the
encumbrancer or owner. If the lessee's right to remove terminates, the
priority of the interest of the lessor continues for a reasonable
time.

(6) Notwithstanding sub. (4) (a) but otherwise subject to subs. (4)
and (5), the interest of a lessor of fixtures, including the lessor's
residual interest, is subordinate to the conflicting interest of an
encumbrancer of the real estate under a construction mortgage recorded
before the goods become fixtures if the goods become fixtures before
the completion of the construction. To the extent given to refinance a
construction mortgage, the conflicting interest of an encumbrancer of
the real estate under a mortgage has this priority to the same extent
as the encumbrancer of the real estate under the construction
mortgage.

(7) In cases not within subs. (2) to (6), priority between the
interest of a lessor of fixtures, including the lessor's residual
interest, and the conflicting interest of an encumbrancer or owner of
the real estate who is not the lessee is determined by the priority
rules governing conflicting interests in real estate.

(8) If the interest of a lessor of fixtures, including the lessor's
residual interest, has priority over all conflicting interests of all
owners and encumbrancers of the real estate, the lessor or the lessee
may on default, expiration, termination, or cancellation of the lease
agreement, but subject to the lease agreement and this chapter, or, if
necessary to enforce other rights and remedies of the lessor or lessee
under this chapter, remove the goods from the real estate, free and
clear of all conflicting interests of all owners and encumbrancers of
the real estate. The lessor or lessee shall reimburse any encumbrancer
or owner of the real estate who is not the lessee and who has not
otherwise agreed for the cost of repair of any physical injury, but
not for any diminution in value of the real estate caused by the
absence of the goods removed or by any necessity of replacing them. A
person entitled to reimbursement may refuse permission to remove until
the party seeking removal gives adequate security for the performance
of this obligation.

(9) Even though the lease agreement does not create a security
interest, the interest of a lessor of fixtures, including the lessor's
residual interest, is perfected by filing a financing statement as a
fixture filing for leased goods that are or are to become fixtures
under ch. 409.

704.05 Rights and duties of landlord and tenant in absence of
written agreement to contrary.

(1) When section applicable. So far as applicable, this
section governs the rights and duties of the landlord and tenant in
the absence of any inconsistent provision in writing signed by both
the landlord and the tenant. This section applies to any tenancy.

(2) Possession of tenant and access by landlord. Until the
expiration date specified in the lease, or the termination of a
periodic tenancy or tenancy at will, and so long as the tenant is not
in default, the tenant has the right to exclusive possession of the
premises, except as hereafter provided. The landlord may upon advance
notice and at reasonable times inspect the premises, make repairs and
show the premises to prospective tenants or purchasers; and if the
tenant is absent from the premises and the landlord reasonably
believes that entry is necessary to preserve or protect the premises,
the landlord may enter without notice and with such force as appears
necessary.

(3) Use of premises, additions or alterations by tenant. The
tenant can make no physical changes in the nature of the premises,
including decorating, removing, altering or adding to the structures
thereon, without prior consent of the landlord. The tenant cannot use
the premises for any unlawful purpose nor in such manner as to
interfere unreasonably with use by another occupant of the same
building or group of buildings.

(4) Tenant's fixtures. At the termination of the tenancy, the
tenant may remove any fixtures installed by the tenant if the tenant
either restores the premises to their condition prior to the
installation or pays to the landlord the cost of such restoration.
Where such fixtures were installed to replace similar fixtures which
were part of the premises at the time of the commencement of the
tenancy, and the original fixtures cannot be restored the tenant may
remove fixtures installed by the tenant only if the tenant replaces
them with fixtures at least comparable in condition and value to the
original fixtures. The tenant's right to remove fixtures is not lost
by an extension or renewal of a lease without reservation of such
right to remove. This subsection applies to any fixtures added by the
tenant for convenience as well as those added for purposes of trade,
agriculture or business; but this subsection does not govern the
rights of parties other than the landlord and tenant.

(5) Storage or disposition of personalty left by tenant.

(a) Procedure. If a tenant removes from the premises and leaves
personal property, the landlord may do all of the following:

1. Store the personalty, on or off the premises, with a lien on the
personalty for the actual and reasonable cost of removal and storage
or, if stored by the landlord, for the actual and reasonable value of
storage. The landlord shall give written notice of the storage to the
tenant within 10 days after the charges begin. The landlord shall give
the notice either personally or by ordinary mail addressed to the
tenant's last-known address and shall state the daily charges for
storage. The landlord may not include the cost of damages to the
premises or past or future rent due in the amount demanded for
satisfaction of the lien. The landlord may not include rent charged
for the premises in calculating the cost of storage. Medicine and
medical equipment are not subject to the lien under this subdivision,
and the landlord shall promptly return them to the tenant upon
request.

2. Give the tenant notice, personally or by ordinary mail addressed to
the tenant's last-known address, of the landlord's intent to dispose
of the personal property by sale or other appropriate means if the
property is not repossessed by the tenant. If the tenant fails to
repossess the property within 30 days after the date of personal
service or the date of the mailing of the notice, the landlord may
dispose of the property by private or public sale or any other
appropriate means. The landlord may deduct from the proceeds of sale
any costs of sale and any storage charges if the landlord has first
stored the personalty under subd. 1. If the proceeds minus the costs
of sale and minus any storage charges are not claimed within 60 days
after the date of the sale of the personalty, the landlord is not
accountable to the tenant for any of the proceeds of the sale or the
value of the property. The landlord shall send the proceeds of the
sale minus the costs of the sale and minus any storage charges to the
department of administration for deposit in the appropriation under
s. 20.143 (2) (h).

3. Store the personalty without a lien and return it to the tenant.

(c) Rights of 3rd persons. The landlord's lien and power to dispose as
provided by this subsection apply to any property left on the premises
by the tenant, whether owned by the tenant or by others. That lien has
priority over any ownership or security interest, and the power to
dispose under this subsection applies notwithstanding rights of others
existing under any claim of ownership or security interest. The tenant
or any secured party has the right to redeem the property at any time
before the landlord has disposed of it or entered into a contract for
its disposition by payment of the landlord's charges under par. (a)
for removal, storage, disposition and arranging for the sale.

(d) Other procedure. The remedies of this subsection are not exclusive
and shall not prevent the landlord from resorting to any other
available judicial procedure.