Removal of tenants' fixtures at end of lease
I am regularly asked to advise on the removal of tenants' fixtures at the end of the lease.
It is first important to understand the distinction between ‘chattels’ and ‘fixtures’. Chattels are items that are not fixtures and a tenant is generally obliged to remove chattels from the property at the end of the term of the lease.
It is common in a lease to make it clear what a landlord can do with chattels that are not removed from the property at the end of the term. Chattels remain the tenants’ property and the landlord does not want to be liable for the cost of storage, disposal or offer any loss or damage to those chattels.
Tenants’ fixtures comprise of chattels that are attached to the land by the tenant for the purpose of its trade or business, and which are capable of physical removal without causing substantial damage to the land. They may be removed by the tenant during the term of the lease but not after it has come to an end. When they are attached to the land they become part of the land and belong to the landlord at the end of the term of the lease, unless before the end of the term, the tenant exercises the right to remove them.
All commercial leases include obligations known as “yield up” obligations. When a lease comes to an end, the landlord wants to get his property back from the tenant in the physical condition that it should be in if the tenant has complied with lease obligations.
A common yield up obligation is for a tenant to remove fixtures, alterations and to make good the property at the end of the term of the lease.
At the end of a lease a landlord will need to decide whether each and every item left in the property by a tenant is either a fixture or a chattel. Whether a chattel has been sufficiently attached to the land so as to become a fixture will depend upon all the circumstances including the degree and purpose of the attachment.
It is also important to distinguish between a landlord’s fixtures and tenants’ fixtures. If the item is a landlord’s fixture then the tenant is not entitled to remove it on the expiration of the lease.
In terms of tenants’ fixtures which remain in situ on the expiry of the lease, a landlord will need to consider a tenant’s repairing obligations and yield up obligations and decide whether a tenant is in breach by failing to remove the fixture.
Alternatively, a landlord may decide that a tenant’s fixture may actually be of benefit to the landlord’s property and improve the ability to re-let.
Rob Cooke, a Director at Lupton Fawcett Denison Till, is on 0114 228 3261 or [email protected]