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A fixture is a legal concept that includes any physical property that is permanently attached or fixed to real property. If the property is not affixed to real property it is considered chattel property. Fixtures are treated as a part of real property, particularly in the case of a security interest. A classic example of a fixture is a building, which in the absence of language to the contrary in a contract of sale, is considered to be part of the land itself and not a separate piece of property. Generally speaking the test for deciding whether an article is a fixture or a chattel turns on the purpose of attachment. If the purpose was to enhance the land the article is likely a fixture. If the article was affixed in order to enhance the use of the chattel itself then the article is likely a chattel.

Chattel property is converted into a fixture by the process of attachment. For example, if a piece of lumber sits in a lumber yard it is a chattel. If the same lumber is used to build a fence on the land it becomes a fixture to that real property. In many cases, the determination of whether property is a fixture or a chattel turns on the degree to which the property is attached to the land. For example, this problem arises in the case of a trailer home. In this case the characterization of the home as chattel or realty will depend on how permanently it is attached--such as whether the trailer has a foundation.

The characterization of property as a fixture or as chattel is important. In most jurisdictions, the law respecting the registration of security against debt, or proof that money has been lent on the collateral of property, is different for chattels than it is for real property. For example, in the province of Ontariomarker, Canada, mortgages against real property must be registered in the county or region's land titles office. However, mortgages against chattels must be registered in the province-wide registry set up under the Personal Property Security Act.

In the case of a trailer home, whether it is a fixture or chattel has a bearing on whether a real property mortgage applies to the trailer. For example, most mortgages contain a clause that forbids the borrower from removing or demolishing fixtures on the property, which would lower the value of the security. However, there have been cases where lenders lend money based on the value of the trailer home on the property, where that trailer is later removed from the property. Similarly, a chattel mortgage granted to allow a person to purchase a trailer home could be lost if the trailer is later attached to real property.

The law regarding fixtures can also cause many problems with property held under a lease. Fixtures put in place by the tenant belong to the landlord if the tenant is evicted from the property. This is the case even if the fixture could have legally been removed by the tenant while the lease was in good standing. For example, a chandelier hung by the tenant may become the property of the landlord. Although this example is trivial, there have been cases where heavy equipment incorporated into a plant has been deemed to have become fixtures even though it was sold as chattels.

Because the value of fixtures can often exceed the value of the land on which they were affixed, lawsuits to determine whether a particular item is a chattel or a fixture are common. In one case in Canada, a provincial government argued that a huge earth dam was a chattel, as it was only held in place by gravity and not by any type of affixation (the claim was rejected).

In a sale of land, fixtures are treated as part of the land, and may not be removed or altered by the seller prior to the transfer of the land.

Trade fixtures

An important exception to the usual treatment of fixtures is the category of trade fixtures - chattels installed by a tenant on commercial property specifically for their use in a trade or business. These may always be removed by the tenant, so long as any damage to the structure caused by the removal is repaid or repaired.

Law in Australia

In the absence of agreement between the parties, the doctrine of fixtures, subject to statute, operates to resolve contests concerning title to objects.

Whether a chattel by is nature becomes a fixture by virtue of all the circumstances surrounding their annexation to land, depends upon (i) the purpose and (ii) degree of annexation. Semble, it is a mixed question of fact and law, to be determined objectively, the subjective intention being a consideration.

Intention of annexation

Intention may be ascertained from the annexing party's relation to the land’s possessor when the chattel’s use is contemplated, not from the party’s agreement. Objects brought onto land by tenants may become fixtures and this fact may be a significant determining factor.

Purpose of annexation

Since Palumberi v Palumberi, greater emphasis has been directed to the purpose of annexation. Each case depends upon its own facts, however a guiding test is whether a chattel has been fixed with the intention that it shall remain in position 'permanently or for an indefinite or substantial period', or only for some temporary purpose.

Degree of annexation

Where the object is not resting by its own weight, this will raise the rebuttable presumption that the chattel is a fixture. Non-affixed objects may become fixtures especially when they will be used for an extensive period.

Further indicators include whether the object can be detached without substantial damage being caused, whether it was fixed for the better enjoyment of the land or the object itself, the period of time in use and its function, the function served by its annexation and whether the cost of renewal would exceed the value of the property.

Tenant's rights of removal

a tenant’s right of removal does not extend to agricultural fixtures.

Notes

  1. Ziff, p102
  2. See especially Appleby v Myers (1867) LR 2 CP 651; Hobson v Gorringe [1897] 1 Ch 182
  3. See generally The North Shore Gas Company Limited v The Commissioner of Stamp Duties (New South Wales) (1939) 63 CLR 52
  4. See generally Monti v Barnes [1901] 1 QB 205, 207 (A.L. Smith MR); Reid v Smith (1905) 3 CLR 656, 667 (Griffiths CJ); Leigh v Taylor (1902) AC 157, 158 (Lord Halsbury L.C); Lees & Leech Pty Ltd v Commissioner of Taxation [1997] FCA 404
  5. See especially Commissioner of State Revenue v Uniqema Pty Ltd (2004) 9 VR 523, 544 (Ormiston J); Palumberi v Palumberi [1986] NSW Conv R 55,673; Pan United Marine Ltd v Chief Assessor, Singapore [2007] SGHC 21 Cf Australian Provincial Assurance Co. v Coroneo (1938) 38 ST (NSW) 700
  6. See especially Belgrave Nominees Pty Ltd v Barlin-Scott Airconditioning (Aust) Pty Ltd (1984) VR 947; National Australia Bank v Blacker (2000) 179 ALR 97; Leigh v Taylor (1902) AC 157
  7. See especially Holland v Hodgson (1872) LR 7 CP 328, 334 (Blackburn J); Commissioner for Railways v Valuer-General [1974] AC 328; Commissioner of Stamps (Western Australia) v L Whiteman Limited (1940) 64 CLR 407
  8. Monti v Barnes [1901] 1 QB 205 Cf Reynolds v Ashby & Son [1904] AC 461 (HL)
  9. See especially Hobson v Gorringe [1897] 1 Ch 182; Melluish v BMI (No 3) [1996] AC 454; Permanent Trustee Australia Ltd v Esanda Corporation Ltd (1991) 6 BPR 13,420; Anthony v Commonwealth (1973)
  10. See especially Reid v Smith (1905) 3 CLR 656; Anthony v Commonwealth (1973) 47 ALJR 83; May v Ceedive Pty Limited [2006] NSWCA 369 Cf Ball-Guymer v Livantes (1990) 102 FLR 327
  11. Reid v Smith (1905) 3 CLR 656, 667 (Griffiths CJ)
  12. Hobson v Gorringe [1897] 1 Ch 182
  13. See especially Hobson v Gorringe [1897] 1 Ch 182; Reynolds v Ashby & Son [1904] AC 466; Melluish v BMI (No 3) Ltd [1996] 1 AC 454, 473; Eastern Nitrogen Ltd v Commissioner of Taxation [1999] FCA 1536
  14. See, eg, Eon Metals NL v Commissioner of State Taxation (WA) (1991) 22 ATR 601; North Shore Gas Co v Comr of Stamp Duties (NSW) (1940) 68 CLR 52
  15. Leigh v Taylor (1902) AC 157; Mitchell v McNeil (1909) 11 WAR 153
  16. Jiwira v Primary Industry of Bank Authority [2000] NSWSC 1094
  17. See generally N H Dunn Pty Ltd v. LM Ericsson Pty Ltd (1980) ANZ Conv R 300
  18. Holland v Hodgson (1872) LR 7 CP 328
  19. See especially Holland v Hodgson (1872) LR 7 CP 328; Vaudeville Electric Cinema Ltd v Muriset [1923] 2 Ch 74; Australasian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700, 712-713 (Jordan CJ)
  20. See especially Holland v Hodgson (1872) LR 7 CP 328; Wiltshear v Cottrell (1853) 1 E & B 674; Reid v Smith (1905) 3 CLR 656; Australian Joint Stock Bank v Colonial Finance Mortgage, Investment & Guarantee Corporation (1894) 15 LR (NSW) 464; Monti v Barnes [1901] 1 QB 205
  21. See especially Attorney-General (Cth) v R T Co Pty Ltd (No. 2) (1957) 97 CLR 146; Anthony v Commonwealth (1973) 47 ALJR 83; Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700
  22. See especially Belgrave Nominees Pty Ltd v Barlin-Scott Airconditioning (Aust) Pty Ltd (1984) VR 947; May v Ceedive Pty Limited [2006] NSWCA 369; National Australia Bank v Blacker (2000) 179 ALR 97 Cf Australian Provincial Assurance Co Ltd v Coroneo (1938) 38 SR (NSW) 700
  23. See, eg, Re Starline Furniture Pty Ltd (In Liq) [1982] 6 ACLR 312; Metal Manufacturers Ltd v FCT (2001) 46 ATR 497; National Dairies WA Ltd v Commissioner of State Revenue (2001) 24 WAR 70
  24. See especially Holland v Hodgson (1872) LR 7 CP 328; Hellawell v Eastwood (1851) 6 Ex 295; Spyer v Phillipson [1931] 2 Ch 183; Adams v Medhurst & Sons Pty Ltd (1929) 24 Tas LR 48
  25. Interconnected items of plant and equipment used as a milk processing plant in a dairy business were held to be fixtures in National Dairies WA Ltd v Commissioner of State Revenue (2001) 24 WAR 70
  26. See especially Holland v Hodgson (1872) LR 7 CP 328; Reynolds v Ashby & Son [1904] AC 461 (HL); Climie v Wood (1868) LR 3 Ex 257; N H Dunn Pty Ltd v L M Ericsson Pty Ltd (1979) 2 BPR 9241
  27. Hobson v Gorringe [1897] 1 Ch 182
  28. N H Dunn Pty Limited v L M Ericsson Pty Limited (1979) 2 BPR 9241
  29. Metal Manufacturers Ltd v FCT (2001) 46 ATR 497
  30. Elwes v Maw (1802) 3 East 38


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