Peter Bahlmann and Nicholas Kyriakoudes
Is it a fixture or chattel?
Contracts for the acquisition of property often include a clause under which the purchaser becomes entitled to any fixtures attached to the property. Generally, fixtures are those immovable objects which are considered part of the land by being fixed or attached to the land. Conversely, chattels are items of property that are moveable and do not form part of land.
Even in the absence of an express condition in a contract, the common law is that fixtures form part of the land and are, by implication, included in any sale and purchase of land.
In determining whether an object is a fixture or a chattel the court will consider:
- The degree of annexation, and
- The purpose or object of the annexation.
Under the common law, there is the presumption that if a chattel is attached to land, then it is prima facie a fixture. The strength of this presumption will vary according to the level of attachment of the item to the land. The more attached the item, the stronger the presumption that the item is a fixture. The actual intentions of the parties may be relevant but are not conclusive.
Old cases decided by the courts are instructive, but not always completely helpful as a guide. In the case of Leigh v Taylor 1902, tapestries attached to a wall on wooden frames which were nailed were held to be chattels, not fixtures. This was because the purpose of their attachment was for enjoyment as chattels. But in the case of Re Whaley 1908, the court found tapestries to be a fixture because they were designed to improve and enhance the character of the particular room in which they were displayed. So, the purpose of annexation is a very important consideration and means that like items aren’t necessarily always treated the same way.
The relevance for buyers and sellers of land
The best way to ensure certainty and avoid potential disputes when it comes to the sale or purchase of land is to consider carefully and include express terms in any contract stipulating those items that are included in the sale and purchase and expressly stipulating those items that are not included.
Good examples of items that are movable, but not easily movable, are things like billiard tables, pianos and large heavy urns, statues or sculptures. It is best to be clear in any contract about such items.
Failure to address such items expressly can lead to ambiguity, expensive disputes and potential disappointment.
The relevance for tenants
To avoid hardship for tenants, tenants can remove fixtures they annex to land during a lease. Known as “tenants’ fixtures”, subject to the express terms of the lease, a tenant has the right to remove items they attach to the land before the expiry of the lease, provided that the tenant must also make good any damage caused by the removal of such fixtures. This rule extends to trade, domestic or ornamental objects a tenant attaches to land provided the tenant did not intend to make a permanent improvement to the land. In determining whether such an intention existed, the court looks at:
- Whether removal of the object would cause material injury to the land or cause destruction of the fixture.
Subject to any agreement contained in the lease, a tenant’s right of removal exists until the termination of the lease. If the tenant fails to remove the fixture, they “voluntarily relinquishes their claim (over the property) in favour of the landlord” (Lyde v Russell 1830). There are exceptions to this rule such as:
- In tenancies of uncertain duration, the tenant has a reasonable time after the termination for the lease to remove fixtures.
- If the leased is ended by forfeiture or surrender, the tenant may remove the fixtures where they retain a right to possession.
Obligations to remove fixtures under Lease
Lease agreements will commonly stipulate the tenant has an obligation to remove fixtures or other alterations or additions that a tenant has made to the land during the period of the lease, before the expiry of the lease. Failure to comply with such obligations may render the tenant liable to damages (likely to be the costs incurred by the landlord to fulfill the obligation of removal themselves) or any liquidated damages stipulated in the lease in addition to surrendering the possession of any fixtures left to the landlord.
If you require assistance or advice with your obligations and rights under a lease or a contract for the sale of land please contact us on 42 222 666 or by email at hansons@hansonslawyers.com.au