If you are buying or selling a property, especially if it is a commercial property, you would be well advised to pay close attention to a recent case in the High Court concerning the nature of items in a steel plant. The nature of these items - whether they are fixtures or fittings (otherwise known as “chattels”) - affects whether they are sold with the property or not. Therefore, especially in the case of commercial items, the value of the property can be greatly increased if the items on the land are deemed to be fixtures.
Fixtures or fittings
According to the Law of Property Act 1925, a property is sold inclusive of “all outhouses, erections, fixtures, cellars, areas, courts, courtyards, cisterns, sewers, gutters, drains, ways, passages, lights, watercourses, liberties, privileges, easements, rights, and advantages”. Some of these items are easy to identify (e.g. gutters), but others are more complex. In particular, the courts have be left to interpret the meaning of “fixtures”, which are sold with the property, as opposed to fittings, which are not.
The courts have built up general guidelines to help distinguish between fixtures and fittings. The main principle is to establish the intention of the person who brought the items onto the land. In order to judge this intention, the court will have regard to (i) the degree of attachment to land, and (ii) the purpose of attachment. Fixtures are those items that are more firmly attached to the property, generally being added in order to enhance the property and intended to remain when the property is sold.
Peel Land and Property v TS Sheerness Steel
In a recent case, the High Court gave some further guidelines about what may or may not be considered a fixture. Mr Justice Morgan set out a series of questions that should be addressed:
- What is the physical extent of the item to be considered?
- Can the item be physically severed and, if so, with what degree of difficulty?
- What is the effect of severance of the item on the premises which remain and is that effect remediable?
- What is the effect of severance of the item on the item itself and is that effect remediable?
- Does the item when severed retain its essential character and utility?
By asking these questions, the judge decided that cranes running on rails were fittings, whereas the rails they ran on were fixtures. One key feature was that the cranes could be lifted intact from the rails, without damage to themselves or the land. Although this would take two to four days at a cost of around £10,000 for each small crane, or up to £25,000 for a large crane, the judge held that “the fact that the item is bulky and awkward and that the exercise of severance is complex” does not necessarily mean that it is a fixture.