What happens to fixtures after a commercial lease has ended?

On Behalf of | Oct 21, 2021 | Real estate transactions

Some business owners need certain fixtures to conduct their operations effectively. A few of these fixtures may exist when leasing the property, while tenants must install others when taking possession of their property. Some examples of such fixtures include shelves, air conditioning units, lighting, booths, drapes, ceiling fans, display cabinets, etc.

As the tenant or landlord, you may wonder what will happen to these fixtures once the lease has ended and who should pay for their removal.

It depends on the nature of the fixtures

Usually, if the necessary criteria are met, tenants may take certain fixtures with them. However, in the absence of agreement between the parties, Arizona courts will consider the following factors in deciding whether an item has become a fixture or not.

  • Adaptation:  Was the item adapted for use with the actual property?
  • Annexation:  Can the item be removed without damaging the premises?
  • Intention: Was it the tenant’s intention to annex it to the real property?

When a lease comes to an end, a tenant is typically required to leave the property in ‘broom swept’ condition with reasonable wear and tear. Most lease agreements spell out ownership and removal of fixtures installed on the property by the tenant. For instance, removing a fixture will damage the property, or if it is considered an improvement that cannot be easily removed, it will remain with the property.

Avoid fixture disputes

No one wants the headache that comes with the back and forth of property disputes. Therefore, it is necessary to look extensively at what the law says and make an informed decision moving forward. Do not make assumptions about commercial real estate deals – it could be costly to you and your business.