Fixture Liens & Fixture Disputes 101by Punctual Abstract
The Latin phrase “quicquid plantur solo, solo credit” means that what is attached to the land becomes part of the land. That may seem fairly straightforward, but determining what items are fixtures (improvements to real property like air conditioners, solar panels and fences) and what are chattel (moveable objects that could be removed without damaging the property) is more complicated. Because fixtures may be transferred, leased, or taxed along with the property to which they are affixed, it’s important to clarify fixtures in purchase agreements and to uncover any prior liens on fixtures prior to making a purchase.
The basic rule of fixtures and chattels is rather simple: a seller can take all chattel with them, but they must leave all fixtures in place. There is no set definition of a fixture, but generally they are defined as “goods that have become so related to particular real property that an interest in them arises under real property law.” Certain states’ civil codes have legal definitions set that define the nature of “attachment,” but even then disputes between buyers and sellers do occur. The newly installed floor is obviously a part of the real property—it can’t be removed without damaging the property as a whole—but other items, like ovens or solar panels are more complicated.
Fixture Disputes between Buyers and Sellers
Because no fast-and-ready rule for fixtures exists, courts resolving fixture disputes between buyers and sellers typically look at the purchase agreement for guidance. In a recent case in New York, a buyer arrived on moving day to find that all the hoses and attachments for the home’s vacuum system were gone. The seller claimed that these items were moveable and could be removed without damaging the property, but the buyer (and eventually the court) argued that because they were essential to a fixture, they were to be considered a fixture as well. In the end, the purchase agreement did not state an exemption on the hoses and attachments, so they were returned to the buyer.
Louisiana Fixture Rules
A debtor owns building encumbered by a mortgage in favor of Lender A. He runs a convenient store on the first floor and lives in the basement. Lender B finances the purchase of solar panels that the debtor intends to install on the roof of the property. Lender A’s mortgage documents indicate that his interest in the property covers real estate. If the solar panels are considered fixtures, then they are covered under the mortgage. In other states, Lender B can preserve priority interest on the solar panels by submitting a fixture filing within 20 days of the panels becoming a fixture on the property (by being installed and attached). Louisiana civil code La. Rev. Stat. § 10:9-334(d)(3) states that Lender B must perfect their security interest in the panels before the goods become fixtures—not within 20 days.
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Punctual Abstract national title abstracting company located in Harvey, LA. We provide commercial and residential abstracts of all kinds. We can perform a public records search to uncover prior fixture filings and property encumbrances, and perform a UCC search of Secretary of State records to uncover if any liens are filed against a property’s fixtures. For more information on UCC searches and title searches, please visit our homepage or contact us today.