The typical fact pattern arises when a tenant during the course of his tenancy adds various items to the leased premises. Do these items belong to the tenant or to the landlord? Can the tenant remove these items when the lease is terminated?

The first question is whether the item is a fixture. Second, assuming an item is a fixture, at issue is whether it qualifies as a trade fixture. The law for determining if an item is a fixture is codified in Cal. Civ. Code § 660. “A thing is deemed to be affixed to land when it is attached to it by roots . . . or imbedded in it . . . ; 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 . . . . “ However, in analyzing whether or not a given item is a fixture, California courts do not rely exclusively on the characterization set forth in § 660. Rather, the courts look a number of factors, most importantly intent.

Once property is characterized as a fixture it ceases to be personal property and becomes part of the landlord’s property: “When a person affixes his property to the land of another, without an agreement permitting him to remove it, the thing affixed, except as otherwise provided in this chapter, belongs to the owner of the land, unless . . . the [tenant] elects to exercise the right of removal provided for in Section 1013.5 of this chapter.”

Large commercial tenants can spend hundreds of thousands of dollars on their leased space on the expectation that they own such “improvements.” Similarly, landlords can often legitimately receive the ownership and long term benefits of a tenant’s capital investments without spending any money. The determination of whether an item is a fixture can have significant financial impact.

About Adishian Law Group, P.C.

Adishian Law Group is a California law firm with a statewide practice in the areas of Corporate law, Employment law, Real Estate law and Mediation Services. Adishianlaw.com is one of the oldest continually operating law firm websites on the Internet. The firm serves its clientele via three offices located in the major business hubs of El Segundo, Palo Alto and San Francisco. As of March 2013, Adishian Law Group, P.C. has represented individual and corporate clients located across 20 California counties, 4 States outside of California and 9 foreign countries — in over 340 legal matters.

For more information about this topic or to speak with Chris Adishian:

Telephone: 310.726.0888 | 650.646.4022 | 415.955.0888
Email: askalg@adishianlaw.com
Social Media: @algpc | Google+ | LinkedIn | Facebook | YouTube

 

Leave a Reply