A real estate broker is managing a commercial office building. One of the tenants, a small law firm, installs new custom-built reception desks, filing cabinets bolted to the wall for security, and a specialized server rack that is hardwired into the building's electrical system. Upon the expiration of their lease, which of these items can the law firm legally remove?
- AAll listed items, as they are considered trade fixtures.
- BOnly the reception desks and filing cabinets.
- COnly the items that are not bolted or hardwired into the building.
- DNone of the items, as they are now part of the real property.
Show answer & explanationAnswer & explanation
Correct answer: A. All listed items, as they are considered trade fixtures.
Trade fixtures are items installed by a tenant for the purpose of conducting their business. Even if they are attached to the property (like bolted filing cabinets or hardwired server racks), they are generally considered personal property of the tenant and can be removed upon lease expiration, provided the removal does not cause substantial damage to the premises. The reception desks are clearly movable.
Why the other options are wrong
- B. This is incorrect. The bolted filing cabinets and hardwired server rack, being for the purpose of the business, also qualify as trade fixtures.
- C. This is incorrect. The key is their purpose (for trade/business) and the relationship of the parties (landlord-tenant), not just the method of attachment.
- D. This is incorrect. While ordinarily fixtures would become real property, the 'trade fixture' exception allows tenants to remove them.
Trade Fixtures
Trade fixtures are items of personal property that are attached to real property by a business tenant for the purpose of carrying on their trade or business, and are generally removable by the tenant at the end of the lease.
- Always considered personal property, even if attached.
- Must be removed before lease expiration (or agreed upon).
- Tenant must repair any damage caused by removal.
- Applies in landlord-tenant relationships, not seller-buyer.
Memory trick: Trade fixtures: if it helps your trade, it's yours to take, damage repaid.