Texas Real Estate Sales Agent ExamProperty OwnershipMedium
A tenant in a commercial lease installs specialized machinery for their manufacturing business. The lease agreement is silent on whether these items are personal property or fixtures. Upon the expiration of the lease, the tenant plans to remove the machinery. What is the legal classification of this machinery?
- AA fixture, remaining with the property.
- BAn appurtenance, automatically transferring with the real estate.
- CPersonal property, but only if the landlord agrees.
- DA trade fixture, removable by the tenant.
Show answer & explanationAnswer & explanation
Correct answer: D. A trade fixture, removable by the tenant.
Specialized machinery installed by a commercial tenant for their business operations is generally considered a trade fixture. Trade fixtures are an exception to the general rule of fixtures and can be removed by the tenant before the lease expires, provided no damage is done to the premises.
Why the other options are wrong
- A. Normally a fixture would remain, but trade fixtures are an exception for commercial tenants.
- B. An appurtenance generally refers to rights or improvements that run with the land, not tenant-installed business equipment.
- C. The right to remove trade fixtures is generally implied, even if the lease is silent, as long as removal occurs before lease expiration and without damage.
Trade Fixture
An item of personal property attached to rented commercial property by a tenant for use in their business.
- Exception to the fixture rule; remains personal property of the tenant.
- Must be removed by the tenant before the lease expires.
- Tenant is responsible for any damage caused by removal.
Memory trick: Fixtures are Fixed, Trade Fixtures are Transient for Trade.