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25. How is the court likely to rule?
The landlord has sued the tenant to enjoin his removal of the items.
Both the lease and the statutes of the jurisdiction are silent on the matter in dispute. At the time the landlord consented and the tenant installed the items, nothing was said about the tenant's right to retain or remove the items.
The lease is set to expire next month. Two weeks ago, when the landlord contacted the tenant about a possible lease renewal, she learned that the tenant had decided not to renew the lease, and that the tenant planned to remove all of the above-listed items on or before the lease termination date. The landlord claimed that all the items had become part of the real estate and had to remain on the premises. The tenant asserted his right and intention to remove all the items.
A tenant leased a commercial property from a landlord for a 12-year term. The property included a large store and a parking lot. At the start of the lease period, the tenant took possession and with the landlord's oral consent installed counters, display cases, shelving, and special lighting. Both parties complied with all lease terms.
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In both types of ownership cases, where the items become incorporated into the realty so fully that they lose their identity, they become part of the realty. Similarly, where identification of the chattel is still possible, but removal would cause considerable loss or destruction, the items are considered fixtures (like heating pipes in a house).
For divided ownership cases, the question is whether the ownership of the chattel has passed to the landowner. Accession is the term used to describe the intent of the annexor to make the chattels a permanent part of the real estate.
American law has created a trade fixtures exception under which tenants could remove an item used in their trade or business that would have otherwise become a fixture on the realty.
An agreement between the landlord and tenant is controlling on whether the chattel annexed to the premises was intended to become a fixture. In the absence of an agreement to the contrary, a tenant may remove chattel that he has attached to the premises as long as the removal does not leave unrepaired damage to the premises or cause the virtual destruction of the chattel. In other words, the tenant will not have manifested an intention to permanently improve the freehold as long as the removal of the chattel does not substantially damage the premises or destroy the chattel. This removal must occur before the end of the lease term, and the tenant does have a duty to repair damages resulting from the removal of the chattel.
C is correct. This is a commercial lease, and the tenant has been using the items in his business. Therefore, the items are trade fixtures, and the tenant may remove them before the end of the lease term unless removal would cause substantial damage. It is unlikely that the removal of these items will cause substantial damage; if so, however, the tenant must either restore the premises or pay the cost of restoration.
A is incorrect. As explained above, this is a commercial lease, and the tenant has been using the items in his business. Therefore, the tenant can remove the chattel as long as he repairs the damage caused by the removal.
B is incorrect. Whether an item is bolted or otherwise attached to the premises is only a factor in determining if it is a fixture.
D is incorrect. The tenant may be obligated to restore the premises. It is unlikely that the removal of these items will cause substantial damage; if so, however, the tenant must either restore the premises or pay the cost of restoration.