Likely because the application of the law is uncertain,
commercial leases generally have detailed clauses dealing with the
question of when a piece of equipment or an improvement installed
in a premises becomes a fixture or remains a chattel. The
answer matters as fixtures, in law, are considered to be part of
the land and, at the end of a lease, ordinarily would revert to the
landlord with the land.
Last year, I
blogged about the relevant legal test and its application to
equipment installed at a ranch, in part to demonstrate how
difficult and apparently whimsical its application could be.
Even though lease terms have evolved to avoid the need go to court
over such issues, the question is still one of great importance on
occasion. For example, taxing statutes often rely on the
value of "land" to calculate taxes. If the land
includes valuable equipment, the taxes payable will be far
greater.
