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What happens to fixtures at the end of a commercial lease?

On Behalf of | Sep 30, 2021 | Firm News |

Many business owners require certain fixtures to be able to effectively run their business. Some of these fixtures already exist on the commercial property they are leasing, while other fixtures will need to be installed during their tenancy. A fixture is generally any equipment that is used as part of the tenant’s business and is located on or attached to the land. Here are some examples of trade fixtures commonly used by a variety of businesses:

  • Air conditioning units
  • Signage
  • Booths
  • Drapes
  • Ceiling fans
  • Display cabinets
  • Light fixtures

What happens to these fixtures when a business owner moves out?

Tenants leasing commercial property in Arizona may be able to take certain fixtures with them, if the necessary criteria are met. Generally, Arizona courts will look at the following factors to decide whether an item has become a fixture.

  • Annexation – Can the item be removed without damaging the real property?
  • Adaptation – Was the item adapted for use with the real property?
  • Intention – Did the tenant intend to annex it to the real property?

In many cases, if removing the item would cause damage to the property or the tenant does not need it for their business, the item will stay with the premises when the tenant moves out and the commercial property owner will take ownership of the items. For example, garages, shrubbery, and kitchen appliances such as stoves and ovens will typically remain with the commercial property. It is also important to note that any changes made by the tenant that constitute as ‘improvements’ to the property that cannot be easily removed will remain with the property.

Business owners may not know which items they can take with them at the end of their commercial lease. An attorney specializing in commercial real estate matters can help avoid fixture disputes between landlords and tenants.