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Fixtures & Chattels

31 January 2017

When you buy land you become the owner of the items or chattels that have been attached to the land to such an extent that they are regarded by the law as part of the land.  This rule is subject to any agreement you make with the seller that the seller can retain ownership of the items and (possibly in some circumstances) the rights of other people with whom the seller has agreed to give an interest in the chattels.

A chattel or a fixture?

Whether an item is a chattel or a fixture can be difficult to say. There are conflicting court decisions on the question. As well as the situation where someone buys land and claims that items included because they are fixtures, there are a range of circumstances where the courts have had to decide this question - for example, where a tenant has affixed chattels to leased property and the landlord wishes to claim ownership of them at the end of the lease, or where a mortgagee of the land and the liquidator of the owner of the land both claim an interest in items that could be regarded as chattels (in which case the liquidator would get them) or fixtures (in which case the mortgagee or someone who purchases the land would get them).

Two tests

There are two tests usually applied to determine whether a chattel has become a fixture:

  1. The degree of its annexation to the land
  2. The purpose of the annexation.

Degree of annexation

If damage would be done by removal of the chattels, then they are more likely to be regarded as fixtures. Chattels attached to the land merely by their own weight (for example, irrigation equipment, a free standing glass house or garden ornaments) are not regarded as fixtures unless the circumstances show that they were intended to form part of the land. The onus is on the person who wishes to show that the chattels have become fixtures. The same applies to chattels that have become so attached to the land that they are now regarded as fixtures – the onus to prove they are still chattels lies on the person wishing to establish that fact.

Purpose of annexation

Although the degree of annexation establishes prima facie whether the chattels are still chattels or have become fixtures, the Courts give greater weight to the purpose of the annexation. Fixtures are put on the land for the permanent enjoyment and improvement of the land whereas chattels are for a more temporary purpose. The application of the purpose test has meant that chattels not attached to the land, or attached only to a minor degree, have been classed as fixtures (for example, keys to a building, garden ornaments forming part of the design of the house, blocks of stone forming a dry stone wall, spoil from a quarry and a removable house) and chattels attached to the land have remained classed as chattels (for example, ornamental panelling, piles bought onto the land for the temporary purpose of providing support during excavation, shrubs and trees, a sawmilling tramway and soil stored on the land).

Fences are regarded as fixtures because they are annexed to the land, they improve the land and are essential to the continuing operation of the land as a farm.

Buying or selling land?

As the ownership of fixtures passes to the buyer when land is sold but the ownership of chattels does not, chattels to be sold should be listed separately in the agreement for sale and purchase. If the seller wishes to retain ownership of fixtures and the right to remove them from the land, then this should also be included in the agreement. Where you are in any doubt as to whether items are chattels or fixtures and as buyer you want them to be included in the sale, or as the seller you want them excluded, then the agreement for sale and purchaser should clearly state how they are to be treated.

Please email me at barbara.mcdermott@nwm.co.nz with your ideas for future articles. Keep an eye out for next month's column, where I will discuss another relevant rural legal issue.


Barbara McDermott is a partner of Norris Ward McKinnon, specialising in commercial and rural law. With offices in Hamilton and Huntly, we have friendly, expert legal advisors ready to help you with your business and personal legal matters.

 

Barbara McDermott