Lesson 3: Legal Test of Fixtures
Three Conditions of Trade Fixtures
1. Essential for tenant business operation 2. Detachable without damage to the property 3. moved out within a certain period of time
Agreement of the Parties
Agreements and Bill of Sales
Method of Annexation
Can be removed without damaging what it's attached too
Relationship of the Parties
If there is a dispute between the people who added the items and the person who removed it. The court usually favorite tenants over landlords, and buyers over sellers in these situations.
Intention of Placing Items on the Land
Intention is the most important consideration in determining if the item should stay or go. Original intentions may change over time.
Five Legal Tests of a Fixture
Method of Annexation Adaptability of item for land's use Relationship of the parties Intention of the person placing the item Agreement of parties.
What does MARIA stand for
Method of Annexation (Attachment) Adaptability of Item to Land's use Relationship of the Parties Intention in placing Items on Land Agreement of the parties
Agreement
Simplest and first test: if the parties have agreed that an item will stay or go, then the agreement must meet legal tests
Relationship of the Parties
When a dispute occurs courts tend to favor tenants and buyers over landlords and sellers
Adaptability of Item to Land's use
adaption how the item is situated or adopted to the real property
bill of sale
agreement in the purchase contract meets requirement. Buyers sometimes believe fridges, washers and other appliances are fixtures but they're personal property
personal property
belongs to seller and goes with them
Agreement of parties
have the parties agree (in writing) whether the item will stay
Trade Fixture
is removable personal property that a tenant attaches to leased property in order to conduct business
Adaptability of use
is the item being used as personal property- has it been adapted or customized
Fixture
part of property being conveyed in a real estate transaction and should stay
Intention of Placing
was it intended to be temporary or permanent?
Method of Annexation (or Attachment)
whether the item is attached to the property or not. As well as how permanent it is