Real and personal property, fixtures, and trade fixtures

Real property and personal property

Real property includes land and things treated as part of the land, such as buildings and permanent improvements. Personal property consists of movable property and other property not classified as real property. A sofa standing in a room is ordinarily personal property; the room's walls are part of the real property.

When an item becomes a fixture

A fixture begins as personal property but becomes part of the real property through its connection to the premises. Analyze five tests together: method of attachment, adaptability, intention, relationship of the parties, and agreement. Attachment includes how firmly the item is installed and whether removal would damage the item or building. Adaptability asks whether the item is specially suited to this property. Intention means the objectively apparent purpose of installation, rather than an owner's undisclosed wish. The parties' relationship matters because a seller and buyer may have different presumptions from a landlord and tenant. An agreement can expressly identify what stays or may be removed.

A built-in cabinet fitted to a kitchen points toward fixture status. A freestanding cabinet that merely rests on the floor points toward personal property. Neither the ability to unscrew something nor its purchase price settles the issue. Read all the facts and any relevant agreement.

Trade fixtures and severance

A trade fixture is an item a tenant installs for carrying on a business, such as removable business equipment. It may remain the tenant's personal property despite attachment. Distinguish equipment used in the tenant's trade from ordinary improvements made for the building itself. A business owner's installation on property the business owns is not a tenant trade fixture merely because it serves a business.

The general trade-fixture rule permits tenant removal within the applicable time, subject to the lease and repair of removal damage; it is not permission to destroy the premises. Specific rights and deadlines depend on the governing law and agreement.

Severance changes an item from real property to personal property by detaching it, as when an authorized owner removes a built-in cabinet. Physical removal and the right to remove are separate questions: a seller cannot justify taking an included fixture simply by detaching it before closing. Identify disputed items in the agreement so classification and ownership do not rest on assumptions.