Do you ever wonder who keeps the freezer, tables, chairs, etc. when your lease is over? There is some confusion surrounding what a trade fixture is and who gets to keep it. So let’s go over the details and clear everything about trade fixtures up!
What is a trade fixture?
A trade fixture is a removable fixture that a tenant attaches to a commercial real estate which is used in the tenant’s trade. Here are some examples:
- Dining boots in a restaurant
- Hydraulic lifts in an auto repair shop
- Lane and pin setting equipment in a bowling alley
- Structures or installations
- Display counters
- Tanks
- Shipping containers
- Signs
- Equipment in certain categories such as manufacturing/processing, retail, restaurant/bar, banking, mineral/agricultural
When vacating a commercial property a tenant can remove all personal property and some trade fixtures under certain conditions. To remove a trade fixture, it must fulfil three conditions.
1. Necessary for the business of the tenant
The equipment in question must be necessary for the tenant to continue running their business smoothly. If the trade fixture is not needed for the running of the business, the tenant must leave it at the property.
2. The fixture must be able to be removed without damage to the property
If removing the fixture would damage the property in any way, it must be left.
3. The fixture must be removed from the property within a reasonable amount of time.
The rule defining a reasonable amount of time is that the tenant should be able to remove the fixture by the time the tenancy is finished. If they have not been provided a reasonable amount of time to vacate the property, in that case the tenant has a grace period to remove the fixtures. The specific rules applied to this situation might differ from state to state.
If the trade fixture in question does not meet all three of these requirements, the commercial property owner gains ownership of the fixture when the tenant vacates the property. This applies even if the tenant installed the fixture. However, if the landlord and tenant have already established an agreement about whether and how the trade fixtures can be removed, then this agreement rules apply for the final decision. Always a good idea to cover these details with the landlord and your realtor when signing the lease.