NYC-basedboutique law firmPardalis & Nohavickabrings the latest legal updates from the world of real estate to PropertyShark.Pardalis & Nohavickahandles an eclectic array of matters, representing individuals and business owners in civil litigation, criminal cases and business transactions,currently litigating and representing clients throughout the United States and around the world.
The kitchen sink has been the source of many remarks over the last century, usually having to do with people “taking everything BUT the kitchen sink.” Anyone who has been involved in renting, purchasing, or selling property can confirm, real estate is an area of life where this expression very aptly applies.
Whether living in a single or multi-family home, an apartment, or leasing commercial space for business, renovations and installations are likely an ongoing process for anyone planning to stay at the same address for a while. Most residents and homeowners naturally understand that renovations including replacing pipes, floor tiles, and locks, can’t be undone when they leave. Regardless, many are wary of leaving behind appliances or improvements of their space when they choose to move out. Although this issue arises more frequently in the case of leased space, both commercial and residential, there are no shortages of heated negotiations over improvements of real estate purchases either.
Generally, all the types of items discussed in this article can be considered fixtures. “Fixtures” are physical property that has become attached to the real property being sold, purchased, or leased. In purchase and sale agreements or commercial leases, fixtures, as well as who owns which, are usually identified by the parties. Even in the event that their ownership is not addressed, fixtures are at the very least explained in these agreements.
To help guide you in identifying the types of fixtures one encounters across various properties, here is a brief rundown of the types of fixtures that are commonly encountered in real estate transactions.
Trade Fixtures vs. Appurtenances
Trade fixtures are typically installed by tenants and remain the property of the tenant. As suggested by their title, trade fixtures are usually heavy equipment that requires installation so that a property can be used to serve a specific purpose which usually coincides with a specific type of business. Thus, trade fixtures appear in commercial real estate transactions, namely commercial leases. Despite being attached to the property in a permanent or near-permanent way, trade fixtures can be removed and kept by the tenant (at tenant’s expense) when the lease expires and the tenant moves out. Common trade fixtures in New York include industrial ovens and stove-tops, pizza ovens, and industrial freezers.
In the event that a tenant leaves their trade fixtures on the premises and refuses to remove or pay for the removal of the fixtures, the trade fixtures can become property of the landlord. However, if the landlord chooses to remove such trade fixtures, they can take legal action against their ex-tenant for any expenses incurred for the removal of the abandoned trade fixtures. Often, though, commercial landlords instead opt to keep the trade fixtures (if they’re in working condition) and look to find a new tenant in the same line of business as their previous one.
Unlike trade fixtures, appurtenances or “permanent fixtures” become part of the property once installed. These permanent fixtures are usually included as part of the whole property being conveyed, either in a lease or purchase and sale agreement. The “permanent fixtures” category often covers undeveloped or un-built areas of a property, such as the back or front yards and air rights, as well as installations like tire swings and tree houses (this may vary depending on the State). As a consequence of their nature, permanent fixtures are often relevant in residential real estate transactions.
Integral vs. Attached Fixtures
In addition to knowing how to differentiate between trade and permanent fixtures, it’s also important to know the difference between fixtures that are integral to the premises and fixtures that are simply attached.
“Attached” fixtures are, as their name suggests, attached to the property (typically nailed, screwed, or glued), and may or may not be attached permanently. Attached fixtures can be hard to identify, as there is little limitation to what they can be. Common items considered to be attached fixtures include, but are not limited to: antique windows, doors, or hardware; chandeliers or antique lighting fixtures; marble countertops; vanities or other bathroom appliances; and bookshelves.
“Integral” fixtures are attached to the property and essential to the purpose the property serves. These include heavy appliances like refrigerators, stovetops, ovens, and washing machines. These kinds of fixtures are integral to the use of the property.
However, it’s important not to confuse integral fixtures with trade fixtures. While trade fixtures are important to commercial tenants and play a key role in lease negotiations, integral fixtures are typically more important in residential real estate transactions and are often not the central focus of negotiations. Further, while trade fixtures remain personal property unless otherwise specified, integral fixtures are not considered personal property unless otherwise specified.
Equipment
Equipment, though sometimes confused and grouped together with fixtures, is a separate category of property that can be relevant in real estate transactions.
Equipment is not personally attached. (If it were, then it would fall within the categories of fixtures indicated above.) Equipment must also be removable from the property without damage to the item, property, or people involved. Although there are many sub-categories of equipment that may be specified in a contract, such as “heavy equipment,” “hazardous equipment,” and “automated equipment,” equipment is not considered part of the property being leased or bought and sold.
Knowing what separates various types of fixtures can help streamline the closing process in real estate transactions, and can help in avoiding arguments that can destroy a deal. These categories of items should be kept in mind when discussing any type of real estate transaction, whether a purchase or lease.
So, next time you find yourself “falling in love” with a kitchen or home library at a viewing, be sure to ask the landlord what is and what is not being left on the property. If you don’t, you might find that they’ve walked out with everything, even the kitchen sink.
About:
Taso Pardalisis a founding partner of the Law Offices of Pardalis and Nohavicka, a leading full- service NYC law firm with offices in Manhattan, Queens and WeWork. Taso may be a well-known attorney with many cases making headlines in major media outlets, but at heart, he is a true entrepreneur that believes in supporting the small business community. His areas of concentration are: Intellectual Property, Trademarks, Corporate, Business Law and Real Estate Law.
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Orion D. Karagiannis is a law clerk at Pardalis & Nohavicka. He is a J.D. candidate of New York Law School’s class of 2022. Orion is a graduate of Baruch College, City University of New York, with a B.B.A. in Real Estate Finance & Development, and has experience in real estate management and development.
