National Real Estate Exam (PSI)Property OwnershipEasy
A tenant who operates a bakery installs a large commercial oven that is bolted to the floor for stability. When the lease ends, the tenant wants to remove the oven. Which best describes the legal status of the oven?
- AIt automatically becomes the landlord's personal property upon installation
- BIt cannot be removed because attachment always determines permanent ownership
- CIt is a fixture and must remain with the property because it is bolted down
- DIt is a trade fixture and the tenant may remove it before the lease expires
Show answer & explanationAnswer & explanation
Correct answer: D. It is a trade fixture and the tenant may remove it before the lease expires
Trade fixtures are items installed by a commercial tenant for business purposes; even if attached, they remain the tenant's personal property and may be removed before the lease ends, as long as the tenant repairs any damage from removal.
Why the other options are wrong
- A. Ownership does not transfer automatically for trade fixtures.
- B. Method of attachment is only one factor; intent and business use matter more for trade fixtures.
- C. Trade fixtures are an exception to the general fixture rule.
Trade Fixture
An item of personal property attached to real estate by a commercial tenant for business use, which remains personal property and is removable by the tenant.
- Exception to the general rule that attached items become real property
- Must be removed before or at the end of the lease term
- Tenant must repair damage caused by removal
Memory trick: Business owners take their tools when they leave the shop.